“How can paper money be the measure of value?” Ruthless Criticism | Money – the “real community” | Chapter 1 | Chapter 2 | Supplement 1 | Supplement 2 | Supplement 3

Supplement 1:
“How can paper money be the measure of value?” [8]

“I can not agree with the claim that currency, the money of the central bank, is a measure of value and that the substance of the currency’s value is a relation of force; the value of commodities has an economically determined substance, and its measure must have this very substance. How then can this ‘stored relation of force’ express and quantify labor time?”

It is not a claim but a fact that central bank money is the measure of the value of commodities. Certainly, it is one well worth explaining. Because if this money is already the measure of all things: What then does it actually measure when it brings the diversity of the world of commodities down to one single denominator? What kind of measure is this and what is it that finds its measure in money?

The student of Marx is sure of the answer: “labor time” is “expressed” and “quantified.” The answer is correct but not much good if it does not even become slightly clear what kind of a tricky “expression” is being dealt with here and what is going on when labor time, which already has its units of measure in days, hours and minutes, first becomes “quantified” by a completely different measure; and it is not much good if labor time as “substance” of the value of commodities is contrasted with the relations of force to which money ultimately owes its validity, as if the two could have nothing at all to do with each other. Here the necessary logical steps could be clear to attentive contemporary readers even without any previous study of Marx.

Undoubtedly, money admeasures a specific power of access to its owner: a quantum of power to appropriate products for sale, which in turn are produced and offered for sale for the very purpose of becoming money, the universal power of access. Money is thus a unit of measure and not merely a means, but the objective representation of the private power of disposal over somebody else’s commodity which is realized in purchasing it. It is, for the other side, the valid practical answer as to whether and in what measure the commodity producer and supplier reached his goal and transformed the expended labor into access power. As the actual, decisive purpose and content of all production in the free market system, money therefore quantifies the labor performed as the source of the private power of disposal. Vice versa, the expended labor, measurable in units of time, counts in this economic system only according to the quantity in the paid commodity price by which it is recognized in practice as the source of property. The money realized in a sale attributes the usefulness of a commodity for its buyer, thus its social necessity, to the expended labor contained in the sold commodity as a specific quantum of the private power of access; for the seller, that constitutes the economic utility of the labor expended on it.

The money economy is therefore an extremely irrational and brutal “system” in which the social division of labor is based on private property, thus on exclusion and the power of disposal. This is what the trade in commodities renders in the outcome: It decides how much a society has worked, i.e. how long in total, and how the social labor time is distributed among the various elements of material wealth. In that respect, money ultimately “organizes” nothing less than the reproduction process of the society. But that just does not happen in such a way that the necessary labor time is directly determined and reasonably distributed, but rather all work in principle is subsumed under the “laws” of private property and the social necessity of expended labor time takes the form of a private recognition in the form of a quantum of private power of disposal. This subsumption is reckoned therefore absolutely resoundingly effective because the exclusionary power of disposal, this alienated product of monetarily divided labor, comes in turn in the form of a piece of metal or receipt or bank statement, in any case as a thing: money “objectifies” the contribution that a certain quantum of labor makes to the mass of social wealth existing as the stuff of privately owned relations of force.

This “objectification” is a social act of force: a forced reduction, which in a way denies itself. Because the validity of things and numbers as units of measure and “incarnations” of private ownership’s power of disposal, including the degradation of useful labor to its source, should inhere in money as a quasi-natural characteristic – actually, the economic power of disposal can be carried around in one’s pocket by the piece; an absurdity that prompted Marx to talk of money with a mixture of irony and disgust as the “fetish” of the bourgeois world. It is therefore wrong, when explaining the exchange value of a commodity and its redemption in money, to take “labor time” and “relation of force” in such a way, as if labor time per se, regardless of the force relation that subjects it to the necessity of “expressing” itself in a money quantum, is the “economic substance” in commodity value [9] and must therefore also be found in money as a number of labor hours expended in producing it – and not in the regime of property over the “living” labor. Labor time is the “economic substance” already in the simple commodity only in the sense that labor time and its real product with its useful qualities are reduced to mere conditions for the socially decisive purpose, guaranteed by virtue of the law – the “substance” – of the produced wealth functioning as private property and becoming money by being sold. Commodity money – e.g. gold – as it has long been in circulation in the market economy, depends on expended labor and the produced use value solely in terms of its function to begin with: under the guarantee contained quasi-objectively and fairly in the object of value, namely the power acquired through labor over the labor of others, thus: to be value. That it never decisively comes down to this social achievement of money when it involves the commercial use of money as a means of its own increase; that it is actually much too precious, its procurement too expensive, and that it can also be replaced in its commercial functions quite well by money tokens and securitized promises of payment: capitalist merchants soon found this out. The modern state goes beyond this: It interprets its force monopoly over its national market economy so demandingly that it separates the last and decisive function of commodity money, to be value, from the body of the commodity, and replaces its objectified value guarantee by its authority. So on the one hand, with its legally protected paper money and coins, it seriously means that the subsumption of labor under private property is nothing other than a social relation of force guaranteed by it. On the other hand, the state with its bank notes by no means merely wants to bring forth sovereign despotic acts, but objective representatives of the productively expended labor which is carried out in its economy of market divided-labor: “objectifications” of constantly reproduced and newly produced property, merely made of paper and yet of such solidity by virtue of its authority, as if its papery money units were not only representatives, but themselves acquired value like the products of a gold or silver refinery.

The bourgeois state extensively exploits its freedom to create money completely without expended social labor according to fixed and continuously revised rules; of course, without disavowing its decree that these printed products are to be accepted as fully valid representations of an honestly produced private property. It thereby opens the broad field of a state guaranteed credit business with its own contradictions and the new state task of pursuing monetary policy. [10]


[8] From a reader’s letter in response to The National Budget: On the Economy of Political Domination, with an answer by the editors in GegenStandpunkt 1-98.

[9] Marx himself warns about such a wrong perception when he – at the beginning of the third chapter in the first volume of Capital – summarizes: “Money as a measure of value is the necessary form of appearance of the measure of value which is immanent in commodities, namely labour-time.” (Capital, Penguin ed., p. 188) He further remarks in the footnote: “The question why money does not itself directly represent labour-time, so that a piece of paper may represent, for instance, x hours’ labour, comes down simply to the question why, on the basis of commodity production, the products of labour must take the form of commodities. This is obvious, because their taking the form of commodities implies their differentiation into commodities [on the one hand] and the money commodity [on the other]. It is also asked why private labour cannot be treated as its opposite, directly social labour.”

[10] The credit economy is not a topic here; neither is therefore the highly developed art of paying without the intervention of money, by booking from one account to another and via other techniques, nor is it a topic to discuss how this trade creates the social ability to pay by using credit papers, briefings to not yet generated money incomes, and debts of all kinds as means of payment. When clarifying the concept of money, one should definitely not be irritated by the official habit of mistaking these accounting processes and means of payment with the money commodity which is defined as the measure of value and legal means of payment by the state. Bank money – sums of money that can be moved by book entries – are means of money that economize on cash flow by replacing the use of cash money. And bonds that serve the financial sector of modern capitalism to attract social wealth do not create money; they don’t add anything to the material wealth of society, which has its measure and finds its form in money; they potentiate nothing but entitlements – which in turn can be bought for money – over produced or to be produced properties, respectively promised or owed command of work and wealth. The difference between money tokens as well as – no matter in which form – promised payments and real money isn’t changed by the fact that in the era of the modern central bank regime, real money commodities themselves exist as the credit of commercial banks from central banks and thus as a number: These numbers have a force of law, they represent a power with a command that wants to be taken as seriously as a noble metal. That such a sovereign decree isn’t exactly the same as a commodity that has been actually earned and functions as money becomes clear when the benefactor of legal tender participates in national credit business as an obligor and when it holds the central bank – by whatever meaningful detour – responsible for its own debts by making the central bank reprint government money: Then using money as a means of credit harms social prosperity which is recounted as and existing as money of the central bank.