Wednesday, March 02, 2016

the equivalent form and the evolution of value into money

Index for a series of articles about Value
1) Marx and the domains of ignorance
2) Unpacking the value suitcase
3) The commodity perspective on value
4) The labour process and different categories of labour
5) The social form perspective of value
6) The equivalent form and the evolution of value into money
7) (to be continued)

Equivalent form           Relative form

one 32GB USB stick = 12 packets of Dilmah tea, or,
one 32GB USB stick is worth 12 packets of Dilmah tea

one 32GB USB stick = 20 litres of Pura full cream milk, or,
one 32GB USB stick is worth 20 litres of Pura full cream milk

On the right hand side it's called the relative form because the value of USB sticks can only be expressed relatively by comparing it with some other commodity. On the LHS it's called the equivalent form. Only the value is equivalent, nothing else.

A whole series of equivalence relationships like the above can be written. But what is the underlying rationale behind comparing unlike things in the above “equations”? USB sticks, tea and milk have few or no natural or physical properties in common. Initially Aristotle had pointed out the difficulty or impossibility of comparing things with unlike properties. Normally, the properties of things are not the result of its relations with other things!

The ability to compare comes about (evolves) through a social process of millions of commodity exchanges. The above equations can be reversed and updated to include money.

12 packets of Dilmah tea = $60 (5*12)
20 litres of Pura full cream milk = $60 (3*20)
one 32GB USB stick = $60

Marx argues that money (he refers to gold or silver as money) evolves from the commodity. Money eventually evolves as a universal equivalent. Gold has the ideal properties required for money (divisibility, durability etc.)

Hence Value arises through the social process of commodity exchange. Its origin and evolution is through this social process and has nothing to do with any identifiable physical or material properties of commodities. Although value eventually takes a physical form in the shape of money its origin is social.
“No scientist to date has yet discovered what natural qualities make definite proportions of snuff, tobacco and paintings 'equivalents' of one another”
- Marx, Theories of Surplus Value, Ch. 20, p. 130
In time the social forms become more than the expression but the bearers, the motivators, the dominant consideration in the decisions people make in their lives. This is fairly obvious, in the case of money, for instance.

Note that the above equations are not a real equations!! It is useful to also look at the equation as ABSURD! One 32GB USB stick does not equal 12 lots of Dilmah tea. USB sticks and Dilmah tea have nothing in common!

We are now so used to money exchange of equivalents that it is an effort to see this inequality. But the natural properties of USB sticks and tea are different, they are not equal! Value is not a natural but a social attribute of the exchange of products, at which point we can call them commodities.

Seeing the equations as absurd helps us to understand that Value and money are social constructs. There is a quote from the 1st German edition of Capital (inexplicably chopped out of subsequent editions) which highlights the absurdity.
“... is as if alongside and external to lions, tigers, rabbits and all other actual animals, which form grouped together the various kinds, species, subspecies, families etc. of the animal kingdom, there existed also in addition the animal, the individual incarnation of the entire animal kingdom”
Money is real enough. But at the same time as being real it is an absurd social construct.

evolution of value into money

How does abstract labour become objectified as a value of a commodity?
  • one commodity becomes the bearer of value or value form
  • the bearer of value called the equivalent form by Marx
  • it must be directly exchangeable, it does not depend on its own use value
  • in this sense it must differ from all other commodities
  • the nature of equivalence is social
  • this social position arises from the joint contribution of the whole world of commodities
  • exchangeability remains embryonic until the equivalent is a universal equivalent
  • this further evolves into a unique universal equivalent
  • empirical check: such a commodity exists – gold money
  • gold money as universal equivalent is a necessary prerequisite to paper money
  • money crystallises out of the process of exchange
“A social relation of production appears as something existing apart from individual human beings, and the distinctive relations into which they enter in the course of production in society appear as the specific properties of a thing – it is this perverted appearance, this prosaically real, and by no means imaginary, mystification that is characteristic of all social forms of labour positing exchange value. This perverted appearance manifests itself merely in a more striking manner in money than it does in commodities”
- Contribution, p. 49

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