Seventeen Contradictions and the End of Capitalism (6 page)

But commodity moneys are awkward to use on a daily basis for the exchange of low-value commodities. So coins, tokens and eventually bits of paper and then electronic moneys became much more practicable in the marketplaces of the world. Imagine what it would be like if we had to pay for a cup of coffee on the street with the exact weight of gold or silver! So while the commodity moneys may have provided a solid physical material basis to represent social labour (the British currency notes still promise ‘to pay the bearer’ even though these notes have long ago ceased to be freely convertible into gold and silver), they were quickly displaced by far more flexible and manageable money forms. But this creates another oddity. Moneys which were originally required to give physical form to the immateriality of social labour get represented by symbols, by representations and, ultimately, by numbers in computerised accounts.

When money commodities are represented by numbers, this introduces a serious and potentially misleading paradox into the monetary system. Whereas gold and silver are relatively scarce and of constant supply, the representation of money as numbers allows the quantity of money available to expand without any technical limit. We thus see the Federal Reserve in our time adding trillions of dollars to the economy at the drop of a hat through tactics like quantitative easing. There seems no limit to such possibilities except that imposed by state policies and regulation. When the metallic basis of global moneys was totally abandoned in the 1970s, we indeed found ourselves in a potentially limitless world of money creation and accumulation. Furthermore, the rise of moneys of account and even more importantly of credit moneys (beginning with the simple use of IOUs) places a great deal of money creation in the hands of individuals and the banks rather than in the hands of state institutions. This calls forth regulatory impositions and interventions on the part of the state apparatus in what is often a desperate attempt to manage the monetary system. Astonishing and legendary episodes of inflation, such as that which occurred in the Weimar Republic in 1920s Germany, have emphasised the key role of the state in relation to maintaining confidence in the qualities and meaning of the paper money it issues. We will return to this when we look at the third foundational contradiction.

All these oddities in part arise because the three basic functions of money have quite different requirements if they are to be effectively performed. Commodity moneys are good at storing value but dysfunctional when it comes to circulating commodities in the market. Coins and paper moneys are great as a means or medium of payment but are less secure as a long-term store of value. Fiat currencies issued by the state with compulsory circulation (compulsory because taxes have to be paid in this currency) are subject to the policy whims of the issuing authorities (for example, debts can be inflated away by just printing money). These different functions are not entirely consistent with each other. But nor are they independent. If money cannot store value at all for more than an ephemeral
moment, then it would be useless as a medium of circulation. On the other hand, if we are looking for money only as a means of circulation, then fake moneys can do the job just as well as the ‘real’ money of a silver coin. This is why gold and silver, which are great as measurers and storers of value, in turn need representing in the form of notes and paper/credit moneys if commodity circulation is to remain fluid. So we end up with representations of representations of social labour as the basis of the money form! There is, as it were, a double fetish (a double set of masks behind which the sociality of human labour for others is hidden).

With the aid of money, commodities can be labelled in the market with an asking price. That price may or may not be realised depending on conditions of supply and demand. But this labelling carries with it another set of contradictions. The price actually realised in an individual sale depends on particular conditions of supply and demand in a particular place and time. There is no immediate correspondence between this singular price and the generality of value. It is only in competitive and perfectly functioning markets that we can anticipate the convergence of all these singular realised market prices around some average price that represents the generality of value. But notice it is only because prices can diverge from value that the prices can move around so as to give a firmer representation of what the value might be. However, the market process offers many opportunities and temptations to disrupt this convergence. Every capitalist longs to be able to sell at a monopoly price and to avoid competition. Hence the name branding and the logo-laden sales practices that allow Nike to charge a monopoly price that permanently ensures departure from unified standards of value in sneaker production. This quantitative divergence between prices and values poses a problem. Capitalists necessarily respond to prices and not to values because in the marketplace they see only prices and can have no direct means of identifying values. To the degree that there is a quantitative departure of prices from values, so capitalists find themselves having to respond to the misleading representations rather than to the underlying values.

Furthermore, there is nothing to stop me putting this label called price on anything, no matter whether it is the product of social labour or not. I can hang the label on a plot of land and extract a rent for its use. I can, like all those lobbyists on K Street in Washington, legally buy influence in Congress or cross the line to sell conscience, honour and reputation to some highest bidder. There is not only a quantitative but a qualitative divergence between market prices and social values. I can make a fortune out of trafficking women, peddling drugs or clandestinely selling arms (three of the most lucrative businesses in contemporary capitalism). Even worse (if that is possible!), I can use money to make more money, as if it is capital when it is not. The monetary signals diverge from what the logic of social labour should be all about. I can create vast pools of fictitious capital – money capital loaned out to activities that create no value at all even as they are highly profitable in money terms and return interest to me. State debt to fight wars has always been funded by the circulation of fictitious capital – people lend to the state and get repaid with interest out of state tax revenues even though the state is destroying and not creating any value at all.

So here is yet another paradox. Money that is supposed to represent the social value of creative labour takes on a form – fictitious capital – that circulates to eventually line the pockets of the financiers and bondholders through the extraction of wealth from all sorts of non-productive (non-value-producing) activities. If you do not believe this, then you have to look no further than the recent history of the housing market to see exactly what I mean. Speculation on housing values is not a productive activity, yet vast amounts of fictitious capital flowed into the housing market up until 2007–8 because the rate of return on investments was high. Easy credit meant rising housing prices and high rates of turnover meant a plethora of opportunities to earn exorbitant fees and commissions on housing transactions. The bundling together of the mortgages (a form of fictitious capital) into collateralised debt obligations created a debt instrument (an even more fictitious form of capital) that could be marketed worldwide. These instruments of fictitious capital, many
of which turned out to be worthless, were marketed to unsuspecting investors around the world as if they were investments certified by the rating agencies to be ‘as safe as houses’. This was fictitious capital run wild. We are still paying the price for its excesses.

The contradictions that arise around the money form are, therefore, multiple. Representations, as we have already noted, falsify even as they represent. In the case of gold and silver as representations of social value, we see that we are taking the particular circumstances for the production of those precious metals as a general measure of the value congealed in all commodities. We in effect take a particular use value (the metal gold) and use it to represent exchange value in general. Above all, we take something that is inherently social and represent it in such a way that it can be appropriated as a form of social power by private persons. This last contradiction has deep and in some ways devastating consequences for the contradictions of capital.

To begin with, the fact that money permits social power to be appropriated and exclusively utilised by private persons places money at the centre of a wide range of noxious human behaviours – lust and greed for money power inevitably become central features in the body politic of capitalism. All sorts of fetishistic behaviours and beliefs centre on this. The desire for money as a form of social power becomes an end in itself which distorts the neat demand–supply relation of the money that would be required simply to facilitate exchange. This throws a monkey wrench into the supposed rationality of capitalist markets.

Whether greed is an innate human behaviour or not can doubtless be debated (Marx, for example, did not believe so). But what is certain is that the rise of the money form and the capacity for its private appropriation has created a space for the proliferation of human behaviours that are anything but virtuous and noble. Accumulations of wealth and power (accumulations that were ritually disposed of in the famous potlatch system of pre-capitalist societies) have not only been tolerated but welcomed and treated as something to be admired. This led the British economist John Maynard Keynes,
writing on ‘Economic Possibilities for our Grandchildren’ in 1930, to hope that:

When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money motive at its true value. The love of money as a possession – as distinguished from the love of money as a means to the enjoyments and realities of life – will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists on mental disease. All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting accumulation of capital, we shall then be free, at last, to discard.
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So what should the critical response be to all this? To the degree that the circulation of speculative fictitious capital inevitably leads to crashes which exact a huge toll from capitalist society in general (and even more tragically from the most vulnerable populations therein), so an outright assault on the speculative excesses and the (largely fictitious) monetary forms that have evolved to promote them necessarily become the focus of political struggle. To the degree that these speculative forms have underpinned the immense increases in social inequality and the distribution of wealth and power such that an emergent oligarchy – the infamous 1 per cent (which is really the even more infamous 0.1 per cent) – now effectively controls the levers of all global wealth and power, so this also defines obvious lines of class struggle crucial to the future well-being of the mass of humanity.

But this is only the more obvious tip of the iceberg. Money is, it bears repeating, as inseparable from value as exchange value is inseparable from money. The bonds between the three are tightly woven. If exchange value weakens and ultimately disappears as the guiding means by which use values are both produced and distributed in society, so the need for money and all of the lustful pathologies associated with its use (as capital) and possession (as a consummate source of social power) will also disappear. While the utopian aim of a social order without exchange value and therefore moneyless needs to be articulated, the intermediate step of designing quasi-money forms that facilitate exchange but inhibit the private accumulation of social wealth and power becomes imperative. This can be done in principle. Keynes, in his influential
General Theory of Employment, Interest, and Money
, for example, cites ‘the strange, unduly neglected prophet Silvio Gesell’, who long ago proposed the creation of quasi-money forms that oxidise if not used. The fundamental inequality between commodities (use values) that decay and a money form (exchange value) that does not has to be rectified. ‘Only money that goes out of date like a newspaper, rots like potatoes, evaporates like ether, is capable of standing the test as an instrument of exchange of potatoes, newspapers, iron and ether,’ wrote Gesell.
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With electronic moneys, this is now practicable, in ways that were not possible before. An oxidisation schedule can easily be written into monetary accounts such that unused moneys (like unused airline miles) dissolve after a certain period of time. This cuts the bond between money as a means of circulation and money as a measure and even more significantly as a store of value (and hence a primary means for the accumulation of private wealth and power).

Obviously, moves of this sort would require wide-ranging adjustments of other facets of the economy. If money oxidises it would be impossible to use that money to save for future needs. Investment pension funds, for example, would disappear. This is not so appalling a prospect as it might appear. To begin with, investment pension funds are vulnerable to becoming worthless anyway (because of underfunding, mismanagement, collapses in stock market values or
inflation). The value of monetarily based pension funds is contingent and not secure, as many pensioners are now finding out. Social Security, on the other hand, is a form of pension right that does not in principle depend upon using money to save for the future. Today’s workers provide for those who preceded them. Far better to organise future incomes by this means than by saving and hoping investments will pay off. A guaranteed minimum income (or minimal access to a collectively managed pool of use values) for all would obviate entirely the need for a money form that would allow private savings to guarantee future economic security.