The Role of Money According to Marx

The Role of Money According to Marx

Length: 1631 words (4.7 double-spaced pages)

Rating: Excellent

Open Document

Essay Preview

More ↓
The Role of Money According to Marx

Use value of a good or service is created by all societies, capitalist and non-capitalist. The use values of such are not specifically measurable in a numerical sense; it is the level of demand by a community, or social necessity for certain goods or services. Unique to capitalist production is the exchange value of goods or services. The exchange value is the value of a good or service compared to another good or service. Understanding use value and exchange value broadly defines two kinds of economies - subsistence economies and surplus producing economies. Subsistence economies are concerned with meeting needs for social good while surplus-producing economies are concerned with meeting social needs (real or perceived) and creating excess profit. It is important to remember that a good or service becomes a commodity under capitalism because it is produced with the intention of being exchanged for a profit. “in commodity production, production necessarily implies exchange; exchange in a necessary step in the process of reproduction” (Shaikh 1977).
However, all commodities, in addition to having an exchange value, retain their use value as well. Goods that have a use value can transition to also having an exchange value when they are appropriated by private industry. An example of this is the water industry in Bolivia, which was owned and maintained by the government, and provided as a service to the public. When the water industry was privatized, the service of water was given an exchange value, for which citizens than had to pay for. Through a recent process of renationalization, the water industry was taken back under control of the government and it maintained its use value while it lost its exchange value.
The value of labor power is a laborer’s ability to do work. Labor power is a commodity under capitalism. More specifically, an important aspect of capitalism is free wage labor – in which a worker owns his labor and can sell it to which they choose at a certain wage, as he has no other commodities to sell. Like any other commodity, labor power, once used, must be renewed. The value of labor power is the value of a worker’s means of subsistence, the bundle of goods that workers consume. The value of labor power is different from a laborer’s wages, because wages can fluctuate under differing market conditions, while the value of labor power is a set value in a historical and cultural context for renewing a laborer’s ability to come a perform work each day.

How to Cite this Page

MLA Citation:
"The Role of Money According to Marx." 17 Jul 2018

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Individual and State Roles in Communism According to Marx and Engels Essay

- Individual and State Roles in Communism According to Marx and Engels Individuals will ultimately serve the state in which the state will control many facets of the individuals’ life, but in return, the civilians will receive the freedoms they deserve in a communistic society. Karl Marx and Frederick Engels adamantly opposed capitalism in many ways and felt the bourgeoisie, or capitalists are enslaving the proletarians, or working class. They claimed that industrialization was reducing the common workingman into mere wage labor and believed that the proletarians of every nation needed to unite and form a revolutionary party in order to overthrow their bourgeoisie captors in order to br...   [tags: Marx Engels Communist Manifesto Essays]

Research Papers
1165 words (3.3 pages)

Essay about The Communist Manifesto by Karl Marx

- The positivist tradition in anthropology, suggested in the Erikson text to have begun following the release of The Course of Positive Philosophy by August Comte between 1830-1842 describes anthropology as the “position that social phenomena can, and should, be investigated 'objectively,' without reference to the personal opinions or the cultural context of the investigator” (Erikson, & Murphy, 2010, p. 10). The early modern study of anthropology is essentially an articulation of Comte's views on how human societies should be examined....   [tags: positivist tradition, erikson, anthropology]

Research Papers
1253 words (3.6 pages)

Social Theories of Karl Marx and Maw Weber Essay

- There are many sociological issues in the world today that can relate back to the concept theories that Karl Marx and Max Weber formed many years ago. Although there are too many for us to go further in depth on, I chose to primarily focus on Racism and Classism. With the perspectives of these theorists in mind I can explain how Racism, Classism, in conjunction with Feminism are among the largest social problems human beings face in the world today. Both theorists have different theories of the social concept Classism, however they are not that much different from one another....   [tags: racism, feminism, classism]

Research Papers
780 words (2.2 pages)

The Protestant Ethic and the Spirit of Capitalism by Max Weber Essay

- ... Theses people were following Gods will by working and accumulating wealth. Unlike Karl Marx that examined the cause and the consequences of capitalism, Weber only dealt with the cause. He also didn't develop or suggest an alternative to capitalism although he believed it wasn't a good practice. Weber characterizes the spirit of capitalism by quoting a number of Benjamin Franklin writings that he considered being the purest ideal typical form. Weber doesn’t identify Franklins approach as a business practice, but instead as an ethic....   [tags: catholics, protestants, capitalists, marx]

Research Papers
1113 words (3.2 pages)

Karl Marx's Communist Manifesto and Its Impact on Society Essay

- Karl Marx's The Communist Manifesto and Its Impact on Society According to the humanities based themes, autonomy and responsibility are defined as “the individual person has the ability to make choices; with those choices comes a responsibility for the consequences of those choices.” [i] This can be related to the Communist Manifesto, which was written by Karl Marx in the 1800’s. Even deeper though, it correlates the class struggles that were apparent in Europe in the eighteenth and nineteenth centuries....   [tags: Communist Manifesto Essays]

Research Papers
1245 words (3.6 pages)

Marx's Theory of Money and the Theory of Value Essay

- Marx's Theory of Money and the Theory of Value The most important point to emerge from Marx's theory of money is the idea that money is a form of value. The difficulty with this idea is that we are more familiar with money itself than with value in other forms. But value does appear in forms other than money. For example, the balance sheet of a capitalist firm estimates the value of goods in process and of fixed capital which has not yet been depreciated, as well as the value of inventories of finished commodities awaiting sale....   [tags: Karl Marx Money Finances Theorists Essays]

Research Papers
5097 words (14.6 pages)

Essay on The Role Money Plays in Society

- Money Money is the driving force behind everything in modern day society. According to Ford, a character in Noah Hawley’s A Conspiracy of Tall Men, money is what keeps society together. “You know what keeps us from sliding back into barbarism. Money. That is the one constant.”(Hawley, 362) Linus, the main character in Hawley’s novel, does not want to be a part of this society because he is afraid of money and what it represents. “Linus is afraid of money. Not the smaller bills, the Washington’s and Lincolns, the Jackson’s and Grants, but the larger sums, the cashiers checks with multiple zeros, the stock portfolios and escrow accounts, afraid too of what they buy, the new cars with their l...   [tags: Money Society]

Research Papers
2198 words (6.3 pages)

Karl Marx and Capitalism Essay

- Karl Marx, in the Capital, developed his critique of capitalism by analyzing its characteristics and its development throughout history. The critique contains Marx’s most developed economic analysis and philosophical insight. Although it was written in 1850s, its values still serve an important purpose in the globalized world and maintains extremely relevant in the twenty-first century. Karl Marx’s critique of political economy provides a scientific understanding of the history of capitalism. Through Marx’s critique, the history of society is revealed....   [tags: Karl Marx]

Research Papers
893 words (2.6 pages)

Relationship between Inequality and Financial Crisis Essay

- ... According to him the rising levels of inequality in the past three decades led to rise in political pressure for redistribution that eventually came in the form of subsidized housing finance (Rajan, pg.3). The Rajan hypothesis engineered by professor Rajan himself, though said to have existed even before Rajan, goes further to explain the actual triggers of the financial crisis that hit the world in 2008 originating from the United States. Apart from triggering a lively debate about inequality in the United States, it has shed light on other mistakes that caused the financial crisis....   [tags: credit, global, economic, money, bank]

Research Papers
905 words (2.6 pages)

Marx and Engels Against Capitalism Essay

- Due to the evidence with Marx and Engels against capitalism and thus the industrial revolution, this is the leading theme, an argument can be made that both men possible believe industrialization was a positive growth. Therefore, through Marx works and definition terms of using The Communist Manifesto, argues that the history of time existing society is where class struggles between the bourgeoisie and proletarians, with these arguments it possibly may be true. These philosophers have explained worlds in various ways by marking the move from theory into strategies and somewhat the action dated from a work written by Mark and Engels, known as the “The German Ideology”: What is really relevan...   [tags: marx, capitalism, manifesto communism]

Research Papers
678 words (1.9 pages)

Constant capital is one of two forms of capital. Constant capital is the form of capital invested in production infrastructure, as opposed to variable capital that is capital investing in labor costs. Constant capital is in a sense, “permanent,” it is machinery, buildings, land, etc. It is also the raw materials and non-productive costs of operation. Once an investment in constant capital is made, it is distinctly less flexible than an investment in variable capital.
Socially necessary labor time (SNLT) is a distinct definition in Marxian economics. Most simply, the SNLT is the amount of time it takes a worker of average skill to produce a commodity. The SNLT is controlled by both market demand for the commodity, and the existing state of technology involved with the production of the commodity. The defined SNLT for a commodity is what regulates its exchange value.
The labor value of a commodity is the total amount of indirect and direct labor time that is socially necessary to produce a unit amount of a good. Direct labor time is obviously the labor in the current circuit of production, while indirect labor is the amount of labor time involved in previous circuits of production that created the materials for production.
Money is the chosen “universal measure of value” in commodity exchange economies. The value of all commodities is created in the circuit of production, by the amount of concrete labor that went into producing such a commodity; therefore all commodities (in varying amounts) are comparable to each other. 1 ton of iron = 5 bushels of corn = 500 bags of tea = 1 ounce of gold. In capitalism, money is an inherent part of the system because capitalist production inputs depend on the exchange of many different commodities. Although any commodity could theoretically be a unit of exchange, paper money (a non-commodity) is socially validated as this unit. Money is than both a medium of exchange, and a measure of value. In the circuit of industrial capital, money is the starting input M and the final output M′, and the difference between M and M′ is the money form of surplus value.

Using quotes from Capital Vol. I discuss how Marx rejects the notion that surplus value arises in the sphere of circulation and concludes that it has to originate in the production sphere. Show how by using the notion of SNLT one can derive surplus value. What is the rate of surplus value?

Marx’s theory of surplus value concludes that surplus value is created in the circuit of production, but it is realized in the sphere of circulation. Although prices can change in circuit of exchange, the inherent value of a commodity does not, since value is produced earlier. “It is true that commodities may be sold at prices deviating from their values, but these deviations are to be considered as infractions of the laws of exchange of commodities, which in its normal state is an exchange of equivalents, consequently no method for increasing value.” (Vol. I, Ch. V, 156) If a commodity I am selling is marked up 10%, as a seller I may make 10%, but than as a buyer I am forced to purchase commodities at a 10% mark up as well, so no change has happened. However, if I can find a way in my production processes to cut costs by 10%, than I am creating surplus value. Marx argues because unit prices are regulated by unit costs of production, as a capitalist, understanding the SNLT for the production of a commodity and attempting to lower it are a priority in the creation of surplus value. If the SNLT to make a chair is 6 hours, and I am able to make it in 4 hours, I am producing at below the SNLT to make a chair. My productivity is higher, and therefore my unit labor costs are lower, and my unit price is lower. If you are taking more time to produce something than the SNLT, it is difficult to create surplus value. “In the process we are now considering it is of extreme importance that no more time be consumed in the work of transforming the cotton into yarn than is necessary under the given social conditions. If under normal, i.e., average social conditions of production, a pounds of cotton ought to be made into b pounds of yarn by one hour’s labor, then a day’s labor does not count as 12 hours’ labor unless 12 a pounds of cotton have been made into 12 b pounds of yarn; for in the creation of value, the time that is socially necessary alone counts.” (Vol. I, Ch. 7, 184)
We can define surplus value by subtracting from the cost of production the value of our output. The rate of surplus value is the amount of surplus value divided by the costs of the labor to produce it, S/V. Marx also called this the rate of exploitation, because there is an inverse relationship between profits and wages. The rate of surplus value increases when S increases and/or when V decreases.

On the basis of Shaikh (1983) distinguish between laws of motion (dominant tendencies) and conjunctural determinations. What do these two opposing ways of characterizing capitalist dynamics imply for the role of the state in times of economic crises?

There are two ways to think about what Marx calls the “laws of motion” of the capitalist system. One is to say there are general tendencies of capitalism, like the falling rate of profit, and than counter-tendencies, which alter the general tendencies. So both these kinds of tendencies are sharing the same space, in conflict with each other, and where the balance lies in either direction at a particular point in history is a conjuncture. At this conjuncture we can either see the balance shift in favor of either direction. This is where the idea for the role of the state comes in. When these tendencies are on equal ground, state reform and intervention “can tip the balance and hence actually regulate the outcome” (Shaikh 1983, 139).
The second way to think about the “laws” are as dominant and subordinate or countervailing tendencies. The dominant tendencies “arise out of the very nature of the system itself and endow it with a very powerful momentum (Shaikh 1983, 139). While the subordinate tendencies have strength, they are operating within the limits of the dominant tendencies and can only push so far in the different direction. So the state may intervene to strengthen the subordinate tendencies, but it has limited effect. “…structural reforms, state intervention, and even class struggles which leave the basic nature of the system unchanged have limited potential, precisely because they end by being subordinated to the intrinsic dynamic of the system” (Shaikh 1983, 139). Periods of crisis are inevitable with either definition of the tendencies of capitalism, but if resolving crises is just an issue of timing or proper historical context is up for debate. So we understand that capitalism is not eternal or without weak spots, it is a system that was created and hence if properly analyzed, can also be deconstructed.
Return to