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Twitter: @wielisc
‘Published’ May 2020
Original text first published in German 1867, English edition first published in 1887.

Source: First English edition of 1887

The process of simplifying Capital has been carried out by @wielisc.

Proof reading and editing undertaken by @bred_hed

If you’ve always wanted to understand Marxian thought but didn’t have the time or inclination
to wade through dense tracts of wordy economic text, then this document is for you. I have
tried to simplify Capital for a modern, time-poor audience, throwing out much of the wordy
prose and complex metaphors in favour of something a little easier to swallow. This work
covers the first part of Book 1, specifically commodities. This section is the foundational basis
upon which all Marxist thought is built. If you can understand this bit, everything else will
come naturally to you with a little perseverance.

Some parts of Capital have aged better than others. The explanation of values and commodities
remains central to understanding the entire capitalist system (and the Marxist critique of
capitalism). The discussion of money and, specifically, gold’s function within the monetary
system, is less useful without some additional knowledge about gold’s decline in importance
within the monetary system. I will add some writer’s notes where I feel it would be helpful to
go and do some extra reading. However, I do not want to digress too much from the project
brief, which was to provide a simple interpretation of Capital, so I won’t be spending too much
time discussing these issues. At the end of this text, I will provide some resources that will be
able to help you with any further reading.

I hope you find this text useful.

Twitter: @wielisc
‘Published’ May 2020
Chapter I – Commodities ........................................................................................................... 4
Section I: The Two Factors of a Commodity: Use-Value and Value (the Substance and
Magnitude of Value) .............................................................................................................. 4
Use-Value ........................................................................................................................... 4
Exchange Value .................................................................................................................. 4
Section II: The Two-fold Character of the Labour Embodied in Commodities .................... 7
Section III: The Form of Value – Exchange Value ................................................................ 9
Elementary or Accidental Form of Value........................................................................... 9
The two ‘poles’ of the expression of Value: Relative Form and Equivalent Form .......... 10
Section IV: The Fetishism of Commodities and the Secret Thereof ....................................... 10
The Measure of Values ..................................................................................................... 10
Chapter II – Exchange ............................................................................................................. 11
Chapter III – Money, or the Circulation of Commodities ....................................................... 14
Section I – The Measure of Values ...................................................................................... 14
Section II – The Medium of Circulation .............................................................................. 15
A. The Metamorphosis of Commodities .......................................................................... 15
C – M. The First Metamorphosis or ‘Sale’ ....................................................................... 16
M – C. The Second Metamorphosis or ‘Purchase’ ........................................................... 16
B. Additional Notes on Money ......................................................................................... 16
Section III – Money.............................................................................................................. 16
A. Hoarding (Money as a Store of Value) ........................................................................ 16
B. Means of Payment........................................................................................................ 17
Appendix .................................................................................................................................. 18
Chapter I – Commodities

Section I: The Two Factors of a Commodity: Use-Value and Value (the

Substance and Magnitude of Value)


A commodity is something that satisfies a human want or need. If someone is hungry, they
might purchase a loaf of bread. If someone is tired from working forty hours a week, they might
purchase a flight to Spain. The loaf of bread and the aeroplane flight are both commodities. In
modern economic parlance, we often refer to commodities as ‘goods and services.’

The utility of a commodity makes it a use-value. Use-value does not exist outside of the
commodity—it is something intrinsic. Marx poetically writes ‘this utility is not a thing of air’.
A commodity such as a length of iron, a loaf of bread, or a shirt, is therefore a use-value: it is
something useful.

Use-value is independent of the labour required to produce a commodity. Whether a loaf of

bread takes an hour or ten hours to make, does not alter its usefulness to the consumer.

For the purpose of discussion, we talk about use-value in definite quantities: dozens of watches,
yards of linen, tonnes of iron.

Use-values only become a reality by use or consumption. The use-value of a loaf of bread is
not realised until it is eaten, nor a shirt’s until it is worn. Use-value also constitutes the
substance of wealth: in every society, from the hunter-gatherer to the capitalist, use-value is
the determinant of wealth.

Exchange Value

In the simplest possible terms, exchange value is the proportion in which one commodity is
exchanged for other commodities. For now, we will not add money into the equation—but it is
important to note early on that in Marxian economics, we do not consider the money price of
the commodity to necessarily equal its exchange value.

To elaborate: in a capitalist society, use-value is the ‘material depository’ of exchange value.

At first glance, exchange value presents itself as a ‘quantitative relation’, that is, the quantity
with which one sort of use-value is exchanged for another. This makes more sense with an

A kilogram of flour is exchanged for x apples, y petrol, z gold, and so on.

As you can see, the kilogram of flour has a seemingly infinite number of exchange values. By
extension, since x apples, y petrol and z gold all represent one kilogram of flour, they must all
also be exchangeable with one another.
To develop this idea further, if one kilogram of flour = x apples, then there must exist a common
value to both. This common value is neither the kilogram of flour, nor the quantity of apples,
but a third, separate value and therefore, you should be able to reduce the exchange value of
one kilogram of flour and x apples to it. We will call this third value, Y.

In Das Kapital, Marx goes on to illustrate this idea through what I always found to be a complex
geometric metaphor about rectilinear figures and decomposing triangles. A simpler comparison
would be this:

Commodity A = Commodity B = Y

We can express exchange as a mathematical equation. You can subtract from both sides of an
equation to find the value of a common factor. Therefore, there must be some third factor to
equate two commodities: Y.

Now we must determine what Y is. This common value or element cannot be an intrinsic
property of the commodity because although commodities do not all necessarily share the same
physical substance or structure, they are exchanged as material things. The common value
cannot be related to its use-value either, so this leaves us with only one possibility: Y is the
abstraction of human labour required to produce the related commodities. In Marxian
economics we call Y—this common factor in exchange value—simply, value.

To elaborate further, a use-value must also have an exchange value only when it is produced
by abstract human labour. We say ‘abstract’ because we are speaking in theoretical terms at
this point, without regard to the form in which labour power is being expended.

We will go on to determine that exchange value is the only form in which the value of
commodities can manifest itself or be expressed. For now, let us consider that the nature of
value is independent of this, its form.

A use-value has value only because abstract human labour has been embodied within it. How
do we measure the magnitude of this value? In simple terms, by how much labour (the value-
creating substance) is contained within the good or service. We measure the quantity of labour
through its duration and express it in time: hours, days and weeks.

You may think therefore, that if the value of a commodity is determined by the time spent
labouring over its creation, then a good or service produced by an unskilled or lazy labourer
would naturally be more valuable. After all, it might take an unskilled labourer double the time
it takes an experienced labour to produce the same good or service. In Marxian economics,
when we discuss value, we talk about human labour in the macroscopic sense—the uniform,
homogenous labour power of a society, rather than on an individual level. In this way we can
determine the average time necessary to produce a commodity—that is to say, the socially
necessary labour required to produce a commodity. The socially necessary labour power is
therefore the labour time required to produce a good or service under the normal conditions
of production, and with the average skill and intensity required at the time. To illustrate this
with Marx’s own example: The introduction of power-looms into England probably reduced
the labour required to weave a given quantity of yarn into cloth by half. The handloom weavers
continued to require the same time as before; but for all that, the product of one hour of their
labour represented after the change, only half an hour’s social labour, and consequently their
labour fell to one-half its former value.

To summarise the above, commodities which require equal quantities of labour have the same
value. The value of a commodity would therefore remain constant in a vacuum, where there
were no variables to modify the labour time required to produce it. In reality, productiveness
is determined by the skill of the labourer, the level of science and technology in a society, the
organisation of production and other physical conditions. In a simple example: a farm may be
able to produce 20 tonnes of corn in ideal conditions, and only eight tonnes during a drought.

In general:

The more productive the labour, the less labour time is required to produce a good, and
the less labour required to produce a good, the lower its value.

The less productive the labour, the more labour time is required to produce a good, and
the more labour required to produce a good, the higher its value.

A thing can have a use-value, but no value. This will occur whenever something is useful, but
not a product of human labour. Air is one example, land is another.

A thing can also be a product of human labour and useful, without being a commodity. If you
satisfy your own want through the product of your own labour, you have created a use-value
but not a commodity. To illustrate this with an example: if you are hungry, you might produce
a sandwich for your own consumption. This sandwich has a use-value, but because you will
eat it yourself, it has no use-value for others and thus, no social value. It is not a commodity.

Finally, nothing can have value and not be an object of utility. If a thing is useless, then the
labour contained within it is nullified as it creates no value.
Section II: The Two-fold Character of the Labour Embodied in Commodities

This section elaborates upon the previous discussion about labour, and the nature of labour as
it is embodied in commodities. Marx considered this one of the most important theories within
Das Kapital—as it makes plain the distinction between ‘useful’ labour and ‘abstract’ labour,
that is to say, ‘specific’ labour and ‘general’ labour, respectively.

Writer’s note: despite my best attempts to interpret Marx’s original ramblings, this section
remains quite a long and complex part of the chapter. You may read ahead to gain a more
rounded understanding of the role of human labour in the creation of value, but a very quick
and simple explanation would be as follows: labour improves upon the raw materials provided
by nature, thus creating value. In reality, you would not pay for something that took no
labour to create, and in this way, we can see that labour is the source of value in commodities.

To begin, we will take two commodities (and follow Marx’s original sartorial example): a t-
shirt and four metres of cloth. We will say that the first commodity is double the value of the
second, so therefore, if four metres of cloth = W, then the t-shirt is 2W.

The t-shirt is a use value: it satisfies certain wants; not wanting to be cold and/or naked, to
name a couple. The labour involved in its creation is represented by the value in the use of the
t-shirt. In this sense, the labour itself has use-value and we refer to this in Marxian economics
as ‘useful labour’—the useful effect of the labour in the process of making a commodity.

Just as the t-shirt and the cloth are two different use-values, so is the labour required to make
them. The t-shirt is tailored whilst the cloth is spun. As we discussed previously, were these
two objects not qualitatively different, they could not stand to each other in the relation of
commodities. You would not trade a t-shirt for a t-shirt, after all—and as such, you do not trade
the same use-values.

Each type of value corresponds to a different kind of useful labour, classified by its place within
the social division of labour. As an aside, the social division of labour is essentially the
technical division of tasks. The t-shirt tailor is one division. The cloth spinner is another. This
division of labour is a necessary basis for the creation of commodities, but the production of
commodities is not a necessary condition for the division of labour. In pre-capitalist societies
there was still labour specialisation (e.g. blacksmiths, farmers and weavers in feudal society).

To summarise what we have learnt so far:

Within the use-value of a commodity there is contained ‘useful labour’.

Useful labour is the productive activity required to produce a good or service.

Use-values cannot be traded unless the useful labour required to make them is different.

In a community of commodity producers, the difference between useful forms of labour

develops into a complex system—the social division of labour.
Now that we have discussed labour’s relation to use-value, we must discuss the value of

In our example of the t-shirt and cloth, the t-shirt is worth twice as much as the cloth. We
decided that the value of a t-shirt is double two metres of cloth, so therefore one t-shirt is equal
to four metres of cloth in value.

To the extent that they are values, the t-shirt and cloth are what Marx termed, ‘things of a like
substance, objective expressions of essentially identical labour.’ What this means, is that both
the t-shirt and cloth are different products of the same labour. With that said, tailoring and
spinning are nonetheless different kinds of labour. This is confusing, I know. To elaborate,
there are tailors who will produce their own cloth and then turn it into a t-shirt. This is perhaps
not as common the case as it might have been in the production of clothes two centuries ago,
but it remains a possibility.

To put it another way: our tailor may make a t-shirt today, a pair of trousers tomorrow and a
pair of socks the day after that. In this example, these three forms of labour are modifications
of the labour produced by one individual. Through this, we see that—in accordance with
changes in demand within a capitalist society—there must be changes in the supply of human
labour, from t-shirt production, to sock manufacture.

T-shirt production, cloth spinning, and sock production are qualitatively different productive
activities, but ultimately, they are each a productive expenditure of the same human labour—
‘useful labour,’ to revisit the term used previously.

The value of a commodity therefore represents abstract human labour; the general expenditure
of human labour required to produce a commodity, irrespective of that labour’s form.

Marx considered specialised or skilled labour merely as intensified or ‘multiplied’ simple

labour, and we have touched on this before. A commodity may be produced by the most skilful
labour there is, but its value is equated to baseline average or ‘simple’ labour and therefore we
consider skilful labour as a multiplication of simple labour (remember, we talk about value in
the context of aggregate human labour).

In viewing the t-shirt and the cloth as values, we also disregard their use-values. In the same
way, with the labour represented by those values we disregard the difference between its useful
forms (tailoring and spinning). In this way, labour is represented by ‘abstract labour’—general
If the productive power of useful labour required to produce a t-shirt remains unchanged, the
sum of the value of t-shirts increases with their number. If it takes one day to make one t-shirt,
then two t-shirts represent two days of labour. However, if we say that due to technological
developments, it now takes only half a day to make one t-shirt, the value of a t-shirt is now
only half of that which it was before. This occurs because the quantity of labour required to
produce it has halved, even though the quality of the labour has remained unchanged.

The increase in quantity of use-values represents a tangible increase in material wealth. If you
have two t-shirts, you have more material wealth than someone with one t-shirt. With that said,
if you have acquired more use-value—more material wealth, its value may decrease. This
follows the simple rule of supply: if you flood the market with a product, its value tends to
decrease. This relation between wealth and value is caused by the two-fold nature of labour.

In conclusion, all labour is essentially the expenditure of human labour power. In this abstract
form, it creates the value of commodities. All labour is also the expenditure of human labour
power in a special, individual form. This is useful labour and it creates use-values.

Section III: The Form of Value – Exchange Value

Commodities exist in the shape of use values, be that in a tangible form—as is the case of most
goods, or a somewhat intangible form—the experience of a holiday or a rave. Whatever the
case, a commodity has a two-fold nature: an object of utility and a depository of value, a ‘value

As we have confirmed in the previous section, a commodity’s value has nothing to do with its
physical properties. Following this logically, the value of a commodity is therefore tied to a
‘purely social reality,’ that is to say, value is merely the product of a social structure or concept:
abstract human labour. Therefore, value can only manifest itself within a social relation
between commodities, and thus we return to exchange.

Again, we will develop upon the foundations laid in the previous sections and start to discuss
how commodities are traded within a society. We will also begin to touch upon the money
form, and how all of this is relevant within the ‘bourgeois economy’ (the economy we are
currently stuck with).

To begin we will discuss value-relations, the simplest form of which is that of the relation
between one commodity and another. The relation between two commodities gives us a simple
expression of the value of one commodity.

Elementary or Accidental Form of Value

x commodity A = y commodity B
x commodity A is worth y commodity B

4 metres of cloth = 1 t-shirt

4 metres of cloth is worth 1 t-shirt

This elementary form of value underpins the premise of value-form, and the lays the
foundations upon which we will develop our understanding of value-form to include the
relative and equivalent forms, as well as the money-form.
The two ‘poles’ of the expression of Value: Relative Form and Equivalent Form

As you can see in the aforementioned example, two different commodities play two different
roles within our analysis of the value form. The value of the cloth is expressed within the value
of the t-shirt and the t-shirt is the material in which the value is expressed. The value of the
cloth is represented in the relative form—its value is relative to the t-shirt. The t-shirt acts as
the equivalent: it exists in the equivalent form.

To quote Marx directly, ‘The relative form and the equivalent form are two intimately
connected, mutually dependent and inseparable elements of the expression of value; but, at the
same time, are mutually exclusive, antagonistic extremes – i.e., poles of the same expression.’
You cannot represent the value of one commodity by comparing it to the exact same
commodity: you cannot compare four metres of cloth to four metres of cloth (unless the
physical quality of the cloth differs, but this is irrelevant to our topic of discussion). Value must
therefore be expressed in relativistic terms: i.e., in one commodities relation to another.

The commodity that acts as the equivalent cannot be conveyed through the relative form; it
simply expresses the value of the first commodity. You may reverse the roles of the relative
and equivalent forms:

4 metres of cloth is worth 1 t-shirt

1 t-shirt is worth 4 metres of cloth

It may be an obvious observation, but in doing this the value of the cloth immediately ceases
to be expressed though the relative form, instead it becomes the equivalent for the relative
value-form of the t-shirt.

Whether a commodity is expressed through the relative form or the opposite equivalent form
is dependent upon it’s ‘accidental position’ in the expression of value.

Section IV: The Fetishism of Commodities and the Secret Thereof

The Measure of Values

Writer’s note: Throughout Das Kapital, Marx assumes gold as the money-commodity for the
sake of simplicity. This is not perhaps, the most helpful simplification in the twenty-first
century. Not since the Jamaica Accords signed the death of the Bretton Woods system in 1976,
has a currency been officially backed by gold. For this reason, I will omit certain parts of this
chapter that refer to gold as an equivalent commodity, or the object through which currency
derives value. In the present moment, money is essentially backed by debt, and faith in the
global monetary system.
The first function of money is to provide a common material to express the value of
commodities. It thus serves as what Marx called, ‘the universal measure of value’. It is not
money, however, that renders commodities measurable through a common standard, but
because all commodities, as values, are realised human labour. This special commodity allows
us to measure their values, and then we may convert the common measure of their values into
money. Money is simply the physical expression—the phenomenal form—of the value of
commodities—the labour-time innate within a commodity.

The expression of the value of a commodity in money (x commodity A = y money-commodity)

is its money-form or ‘price’. This equation now suffices to express the value of any commodity
in a standardised, socially valid manner. The equations implicit in the determination of
commodity value that we have learnt over the course of this text so far, are no longer required,
because we can express value through money.

Chapter II – Exchange
Commodities must be brought to market by their owners and thus, in order for goods and
services to enter into relation with one another, so too must their owners. The owner of a
commodity must—to ensure the protection of his own commodities—behave in such a way
that does not appropriate the commodity of another and must part with his own commodities
through an act of mutual consent. In establishing such a conventional social relation, we create
and recognise private property. In this way, persons act as representatives of their commodities.

A commodity has no use-value to its owner—if the owner so wishes to exchange the
commodity—other than that the commodity in question is a depository of exchange-value. That
is to say, the commodity has a quantitative property. The act of trading one commodity for
another constitutes the action of exchange, and in carrying out this action, the value of a
commodity is realised. By extension, this means that the value of a commodity must be realised
before its use-value.

Here’s where it gets a bit confusing. Although the value of a commodity must be realised before
its use-value is realised, a commodity must advertise that it has a use-value before the value of
a commodity can be realised. To illustrate with an example:

A person goes to a bakery. That person sees a fresh loaf of bread and understands that the bread
will satisfy his hunger. The bread has thus advertised its use-value through the act of visibly
being a loaf of bread. The person purchases the bread and thus the value of the commodity is
realised. Later, the person goes home and eats the bread, thus realising its use-value as
something that can be eaten to satisfy hunger.

Every owner of a commodity wishes to part with it in exchange for commodities whose use-
values satisfy their wants or needs. From this perspective, exchange is a mere private
transaction. On the other hand, he desires to realise the value of his commodity, to convert it
into any other suitable commodity of equal value, irrespective of whether his own commodity
has or has not any use-value for the owner of the other. From this point of view, exchange is
for him a social transaction of a general character. But one and the same set of transactions
cannot be simultaneously for all owners of commodities both exclusively private and
exclusively social and general.

Let us look at the matter a little closer. To the owner of a commodity, every other commodity
is, in regard to his own, a particular equivalent, and consequently his own commodity is the
universal equivalent for all the others. However, as this applies to every owner, there is, in fact,
no commodity acting as universal equivalent, and the relative value of commodities possesses
no general form under which they can be equated as values and have the magnitude of their
values compared. So far, therefore, they do not confront each other as commodities, but only
as products or use-values.

A commodity cannot act as a universal equivalent, except by a social act. This social action
sets apart a commodity which will represent the value of all commodities. The bodily form of
this commodity thus becomes the socially recognised universal equivalent. You can probably
see where this is going: the commodity in question becomes money.

Money is a necessary social construct within capitalist societies, whereby different products of
labour are equated to one another and thus become converted into commodities.

The direct barter of goods and services (alternatively henceforth: products), is the elementary
form of the relative expression of value in one respect, but not in another. This elementary form
x commodity A = y commodity B

The form of direct barter is:

x use-value A = y use-value B

Articles A and B in this case, are not yet commodities. The act of barter realises their existence
as commodities. As we previously learnt, an object of utility acquires exchange-value when it
has no use-value to its owner, other than as a depository of exchange-value. In order for
products to be tradeable, there must be an implicit understanding between people that those
products are the private property of their owners. At this point Marx goes on to discuss
exchange within the context of what he called, ‘primitive society’, and what we might now call
‘hunter-gatherer societies.’ For the sake of simplicity and brevity, I have excluded this section.
You can find this part within Chapter II of Capital if you’d like to read it for yourself.

In the direct barter of products each commodity exists as a means of exchange to its owner,
and as an equivalent to everyone else, but only if it has use-value to them. At this stage articles
exchanged do not acquire value-form independent of their own use-value, or of the individual
needs of the exchangers. The necessity of value-form grows with the scale of a market. If you
lived on an island wherein the only products available were coconuts, water and sticks, a small
community might get by without value-form. If you live in New York however, where
countless thousands of products are available to you, the necessity of value-form is impossible
to overstate. In a large market, commodity owners will not equate their own commodities to
others without the existence of the universal equivalent commodity. As the act of exchange
develops, this universal equivalent commodity becomes set by social convention and assumes
the money-form. Historically, the commodity that takes on the money-form is a matter of
accident. With that said, Marx highlights two key influential circumstance that decide what
commodity will acquire the money-form. These are:

 The most important article of exchange from outside—the natural form that the
exchange-value of home products finds expression.

 An object of utility that forms a significant portion of indigenous alienable wealth, such
as cattle in nomadic societies.

Marx highlights the nomadic society as the first to develop the money-form, firstly because all
their worldly possessions must be moveable, and secondly because their migration patterns
inevitably put them into contact with other communities. Modern anthropogenic science
somewhat refutes Marx’s claim, however without digressing, I will simply say that Marx’s
assertion gives us a good example of how money-form develops.
Through slavery, various civilisations have even used other people as the material of money,
however it is interesting to note that only recently (on the scale of human history) has land
assumed the money-form. Through land-banking, corporate entities will purchase parcels of
land for future sale or development.

As the action of exchange grows beyond the locality and becomes a national or international
phenomenon, the value of commodities more and more becomes the embodiment of abstract
human labour. Historically, money has in turn attached itself to commodities that are naturally
fitted to perform the function of universal equivalent. For most of human civilisation, that
commodity has been precious metals. The phenomenal form (physical expression) of money
as currency should uphold the following characteristics:

The material should be a worthy embodiment of the undifferentiated and equal abstract
human labour (the quantitative aspect of labour). It should exhibit the same
homogenous, unequivocal qualities.

The material should be both divisible, and capable of being reunited. Gold and silver
possess these properties, being malleable and easily cut to size.

The use-value of the money-commodity is two-fold. In addition to its use-value as a commodity

(gold for example, being the raw material for luxury jewellery), it acquires a formal use-value
ascribed by its social function.

By the simple action of the money-commodity existing, all commodities become particular
equivalents of money. In the modern day, this is so superfluous that it has become
subconscious. We often discuss commodities as equivalents of money— “I bought these
Balenciaga trainers for £500.”

We know now that the money-form is essentially just a society mutually deciding that one
commodity is the embodiment of the value relations of all other commodities. The act of
exchange therefore gives the commodity converted to money its value-form, but not its value.
When a loaf of bread is purchased, it acquires its value-form.

The fact that money is often replaced by symbols of itself (first as paper money in lieu of gold
and silver coins, then as a mere numerical expression on a computer screen) has created the
illusion that money itself is a mere symbol. By extension, this false impression would suggest
that the money-form of an object is not innate to that object but is just the form that a social
relation manifests. If this were true, then every commodity would just be a symbol because in
having value, it would just be nothing more than the physical expression of human labour. This
might sound funny, but Marx notes that this line of thinking was present within economic
circles as late as the 18th century.

Although we know that money is directly exchangeable for all other commodities, we do not
yet know how the magnitude of its value is determined. How do we know how much bread
£5.00 will buy you, or how much money a loaf of bread is worth? The magnitude of monetary
value cannot be expressed except by its relativity to other commodities, just like all other
commodities. Value is determined by the labour-time required for its production, as we know,
and is expressed by the quantity of any other commodity that costs the same amount of labour
time*. The quantity of its relative value is determined at the source of its production through
the action of barter. By the time money enters circulation, its value is already given.

* As I have said before, money is not attached to gold in our current time. Marx’s analysis of
the money-form and gold’s intrinsic relevance within its physical expression is increasingly
irrelevant. Money is created by a bank through the creation of debt. Its value is something
more complex and abstract than its relation to human labour. This is a topic for a whole other
discussion however, and I will not digress about it here.

Chapter III – Money, or the Circulation of Commodities

Section I – The Measure of Values

Writer’s note: Throughout Das Kapital, Marx assumes gold as the money-commodity for the
sake of simplicity. This is perhaps not the most helpful simplification in the twenty-first century.
Not since the Jamaica Accords signed the death of the Bretton Woods system in 1976, has a
currency been officially backed by gold. For this reason, I will omit certain parts of this chapter
that refer to gold as an equivalent commodity, or the object through which currency derives
value. Please see the appendix for further sources on the monetary system.

The first function of money is to provide a common material to express the value of
commodities. It thus serves as what Marx called, ‘the universal measure of value’. It is not
money, however, that renders commodities measurable through a common standard, but
because all commodities, as values, are realised human labour. This special commodity allows
us to measure their values, and then we may convert the common measure of their values into
money. Money is simply the physical expression—the phenomenal form—of the value of
commodities—the labour-time innate within a commodity.
The expression of the value of a commodity in money (x commodity A = y money-commodity)
is its money-form or ‘price’. This equation now suffices to express the value of any commodity
in a standardised, socially valid manner. The equations implicit in the determination of
commodity value that we have learnt over the course of this text so far, are no longer required
because we can express value through money.

Money serves as a standard of value and as a standard of ‘price’

Section II – The Medium of Circulation

A. The Metamorphosis of Commodities

Exchange is a process where commodities are transferred from a position of non-use-values (in
ownership of the seller) to use-values (in ownership of the buyer). In this way, exchange is a
circulation of matter. The product of one form of useful labour replaces another. Once a
commodity is exchanged from the seller to the buyer, it falls out of the sphere of exchange and
into the realm of consumption. For now, we are only interested in the sphere of exchange.

Every change of form in a commodity results from the exchange of two commodities: a normal
commodity, and a money-commodity. When a commodity enters the sphere of exchange, we
must determine whether a commodity is one or the other. If one person has a pair of shoes, and
another person has a £50 note, it is plain to see which is the normal commodity and which is
the money commodity. The normal commodity therefore assumes the use-value and the
money-commodity assumes the exchange-value.

Let’s illustrate this with the aforementioned example:

Person A lists his trainers on Craigslist for £50 and Person B buys them with his £50 note.
Person A then uses that £50 to buy a TV. Person A sees the trainers as a commodity, a
depository of value which he alienates in exchange for £50, which is the trainers’ value-form.
He then parts with the value-form of the trainers for a television, which will become an object
of utility, a use-value.

This exchange was accomplished by two metamorphoses that were opposite but supplementary
in nature: the commodity was first exchanged for money, which was in turn exchanged for
another commodity. Essentially, the trainers were exchanged for the TV, with money acting as
an intermediate stage, and the facilitator of the exchange.

The exchange of commodities can be described by the following changes in their form:

Commodity – Money – Commodity

C – M – C

The overall result of the exchange is C—C, which is both the exchange of one commodity for
another, and the circulation of materialised social labour.
C – M. The First Metamorphosis or ‘Sale’

The movement of value from the body of the commodity into money is the lynchpin of
commodity circulation. The social division of labour causes a person’s labour to be one-sided,
whilst their wants remain numerous. For this reason, the product of a person’s labour serves
merely as exchange-value. It cannot acquire the properties of a universal equivalent commodity
unless it is exchanged for money. Unfortunately, the money required to facilitate this
transformation is owned by someone else. In order to persuade someone to part with their
money, a person’s commodity must be a use-value to the potential buyer. The potential buyer
must also consider the commodity price to be agreeable. If not, they may go to a competitor
with a lower price.

M – C. The Second Metamorphosis or ‘Purchase’

Money is the transformed shape of all other commodities. We are therefore able to
metamorphosise money without any intermediary steps. You know that if you have £10 in your
pocket, you will be able to buy any and all commodities up to the value of £10. The price
therefore, defines the single limit to money’s convertibility.

M-C, a purchase, is also a sale of sorts (C-M) in that although it is the conclusion of one
exchange, it is the potential beginning of another. To refer back to our previous example,
Person A sold his trainers for £50 and bought a TV (C-M-C). The next year, he may sell that
TV on for £40 and buy some aftershave, another C-M-C.

When a person parts with money in exchange for another commodity, they are facilitating a
purchase. They become a buyer.

B. Additional Notes on Money

Section III – Money

As we know, money is the commodity that functions as a measure of value. Coins, paper notes
and the number in your bank account (in turn represented by a digitised card) all act as the
physical expressions of money. Money also acts as an expression of exchange-value within the
context of commodity exchange.

A. Hoarding (Money as a Store of Value)

When money falls out of circulation, it rests in the possession of an entity, be that a corporation,
a charity, a person or otherwise. In this way, money is hoarded—it is stored as value.
Historically, this hoard may have taken on the corporeal form of coins or gold bullion. Today
hoarded money tends to assume a metaphysical form as data stored within a computer, or as
paper in your wallet. Gold bullion remains in use, but is more a reserve of the wealthy, and of
some banks.

In hoarding money, a person must prevent their self from carrying out the second
metamorphosis of commodities. They must not buy! As Marx puts it, “The hoarder, therefore,
makes a sacrifice of the lusts of the flesh to his gold fetish.”

The longer one holds money as a store of value, the more likely it is to differ in real value. All
money devalues over time due to inflation. Money may also increase in value in the short to
medium term if interest rates are high.

What purpose then, does hoarding money serve? In the economic sense, the ability to hoard
money allows the money supply to contract and expand naturally. In the personal sense, a
person may hoard money so that over time, they can amass the sum required to make an
expensive purchase, or to ensure that if they are temporarily unable (or unwilling) to sell their
labour, they have some money to buy use-values.

B. Means of Payment

The development of circulation allows the form that money takes as a means of payment to
become detached from the means of purchase by a period of time. In layman’s terms, credit
has been invented. Now, rather than a simple purchase (M-C), a person can buy a commodity
on credit, and can obtain the commodity before making a payment. When you pay for your
groceries with a debit card and the money does not leave your bank account until the next day,
you are using credit, effectively promising the supermarket that you will pay for your goods in
the future

Credit is a double-edged sword. It greases the wheels of commerce and allows for the
circulation of commodities to flow with greater ease. It allows for multiple sales to take place
simultaneously and abets the capitalist to grow his wealth quicker. On the other hand, credit
allows the whole process of sale and purchase to become interrupted. This occurred memorably
in 2007-2008 when the failure of the credit system deepened the impact of the Great Recession.

The development of credit in turn necessitates hoarding to ensure credit payments can be made
on the correct dates (monthly mortgage payments, quarterly utility bills, fortnightly car-
repayments and so on). Hoarding wealth in and of itself becomes less useful as a method of
acquiring wealth (consider the number of wealthy individuals in the medieval period who
simply lived off their hoarded wealth as opposed to today) as civilisation progresses.
Meanwhile, the necessity of owning money reserves to ensure payment for commodities grows.

The Bank of England on conventional money creation:


The IMF on the Bretton Woods System:


Marxists.org online version of the first English edition of Capital Volume I (1887)

Marxists.org online version of the first English edition of Capital Volume II (1893)

Marxists.org online version of the first English edition of Capital Volume III

Marxists.org online version of Grundrisse (1939-41)