Capital, Chapter Three:
Money, or the Circulation of
Commodities
Money as Power
Defetishize reading
 Class context
 Money as power

 for
capital
 for workers
Structure of Chapter
Money as Measure of Value
 Money as Standard of Price
 Money as Means of Circulation
 Money as Store of Value (or Hoard)
 Money as Means of Payment
 World Money

Money as Measure of Value

Pre-sale: C - M(?) - C(?)
 “Price”
is hypothetical, asked for but not paid
 Use value C has been produced, but has not
found an expression of value

After-sale: C - M - C
 Money
paid; Price has been realized
 Amount of Money measures value of C
Money as Standard of Price
Money Form: (zB, yC, ... nN) = xAu
 Price form, e.g., zB = xAu
 Value is measured by quantity of gold,
ounces
 Price is measured by money name of weight
of gold, e.g., $35/oz, $1.00 = 1/35oz of Au
 Money names attached to coins

Contradictions
As Measure of Value & Standard of Price
 The distinction means possible rupture
 Price and value can differ
 e.g., debasement of currency
 e.g., clipped coins’ value less than nominal
value
 e.g., Locke & recoinage during war

Money as Means of Circulation - 1

As facilitator of exchange

C - M - C represents circulation of commodities

C - M = 1st metamorphosis (of form)
 realization

of exchange value
M - C = 2nd metamorphosis (of form)
 realization
of use value
Money as Means of Circulation -2
Syllogistic mediation
 C-M-C =P-U-I
 C is produced for its particularity exchange
value
 M is the universal equivalent & mediator
 C is acquired for its individual use value in
consumption

Money as Means of Circulation -3
Prime example: LP - M - C
 LP = ability to work (for capital)
 M = wage
 C = C(MS) = means of subsistence
 All this working class view of working for
money as a means to an end:
consumption/life

Possibility of Crisis - 1
Separation of sale & purchase = possibility
of rupture in circuit
 C - M can be accomplished, but
 M - C might not be
 Money can be hoarded
 Say’s Law doesn’t hold in money economy
 Refusal to spend = inadequate aggregate D

Possibility of Crisis - 2
In the case of LP - M - C
 Workers can refuse to sell LP for M
 e.g., refuse to leave land, strike
 Workers can refuse to spend (today)
 e.g., increase savings, reduce consumption
demand

Quantity Theory - 1
Classical Quantity Theory of Money
M = ∑pq/V
 M = money, p = price, q = goods,
V = velocity of money (e.g., turnover/yr)
 With q & V fixed, change in M produces a
change in p, i.e., p = f(M)


e.g. influx of gold from new world in 16th C
meant inflation in Europe
Quantity Theory - 2
Marx’s Interpretation
M = ∑vq/V
 Behind price (p) lies value (v)
 So instead of p = f(M), we have
M = f(v)
 e.g., 16th C gold had lower value per unit
 so, M had to increase to express ∑vq/V

Quantity Theory - 3
Marx’s interpretation with paper money
 M = ∑vq/V
 Paper money only represents value
 Amount of value depends on ∑vq/V
 Value per unit of money depends on
quantity of money
 So, Marx’s interpretation rejoins Classics’

Money as Store of Value
Money “stores” value when hoarded
 Hoard functions in circulation
 Money stored, released
 Like foreign exchange reserves today
 So misers are misguided obstacles to
circulation

Money as Means of Payment
With “credit money” purchase preceeds
payment
 Payment follows later
 e.g., commerical credit, credit cards
 Separation = new potential for crisis
 e.g., debt crisis of 80s & 90s

World Money
In 19th C, int’l money was bullion/metal
 In late 20th C int’l money is credit

 gold
has been demonitized
 although gold bugs still want it back

Marx’s discussion of credit provides basis
for analysis of International Monetary
System & IMF
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