Path of Argument

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The Path of Argument in Volume 1 of Capital

The path of argument was a method of argumentation used in Volume I of Marx's capital, these results were obtained using Marx’s dialectical method.

"The wealth of those societies in which the capitalist mode of production prevails, presents itself as 'an immense accumulation of commodities,' its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity."[1]


A commodity is something that is bought and sold, or exchanged in a market.

Distinguishing characteristics of commodities include:

  • It has value, which represents a quantity of human labour. Because it has value, implies that people try to economise its use.
  • A commodity also has a use-value, an exchange-value and a price. It has a use value because, by its intrinsic characteristics, it can satisfy some human need or want, physical or ideal. By nature, this is a social use-value (i.e. the object is useful not just to the producer but has a use for others generally).
  • It has an exchange-value, meaning that a commodity can be traded for other commodities, and thus give its owner the benefit of others' labour (the labour done to produce the purchased commodity).
  • Price is then the monetary expression of exchange-value (but exchange value could also be expressed as a direct trading ratio between two commodities without using money, and goods could be priced using different valuations or criteria)
  • Commodities are products of labour made for sale, rather than for direct use.

“[A] commodity, that is, a use-value which has a certain exchange-value.”

—Marx, TSV, 1:399

"A commodity appears at first sight an extremely obvious, trivial thing. But its analysis brings out that it is a very strange thing, abounding in metaphysical subtleties and theological niceties"


Commodity Value


Use value, or value in use, is the utility of consuming a good; the want-satisfying power of a good or service in classical political economy.

  • Use-value is an aspect of the commodity that coincides with the physical palpable existence of the commodity. In other words, use-value is inextricably tied to "the physical properties of the commodity".
  • A use-value has value only in use, and is realized only in the process of consumption. One and the same use-value can be used in various ways.
  • It is, moreover, determined not only qualitatively but also quantitatively. Different use-values have different measures appropriate to their physical characteristics; for example, a bushel of wheat, a quire of paper, a yard of linen.
  • Use-value as such, since it is independent of the determinate economic form, lies outside the sphere of investigation of political economy. It belongs in this sphere only when it is itself a determinate form.
  • Use-value is the immediate physical entity in which a definite economic relationship (exchange-value) is expressed.

“Whatever its social form may be, wealth always consists of use-values...”

—Marx, CCPE, pp. 27-8.

“The use-value of a commodity is the basis of its exchange-value and thus of its value.”

—Marx, Capital, vol. III, Part VI, Ch. 37: (International, p. 636; Penguin, p. 774.)

Commodity Value


The "exchange-value", or value in exchange, of a commodity represents rather what (quantity of) other commodities it will exchange for, if traded.

Distinguishing characteristics of exchange-values include:

  • Exchange-value for Marx is not identical to its price, and does not need to be expressed in money-prices necessarily.
  • A commodity's exchange-value manifests itself as something totally independent of its use-value. But if we abstract from their use-value, there remains their value, as has just been defined. The common factor in the exchange relation, or in the exchange-value of the commodity, is therefore its value.
Commodity Value


Value is composed of use-value and exchange-value, and is identical to the "socially necessary labour time".

Distinguishing characteristics of value include:

  • Since value includes both use-values and exchange-values, it is neither purely subjectively nor purely objectively determined. Both components must be present if there is to be value.
  • Only in economic systems which produce and exchange commodities (i.e., most notably capitalism, but also pre-capitalist economies, and also under socialism), is there such a thing as the political-economic category of value.
  • Accordingly, it is a relationship which is determined by the average amount of labour time required to produce each good. In other words, the amount of value in a commodity is determined by the "socially necessary labour time" incorporated into it.
  • A thing can be a use-value, without having value. This is the case whenever its utility to man is not due to labour.

“Marx, taking Ricardo’s investigations as his starting-point, says: The value of commodities is determined by the socially necessary general human labor embodied in them, and this in turn is measured by its duration.”

—Engels, Anti-Dühring, Part II, Ch. V: (MECW 25:178).

“A use-value, or useful article, therefore, has value only because human labour in the abstract has been embodied or materialized in it.”

—Marx, Capital, vol. I, chapter I: (International, p. 38; Penguin, p. 129.)

“Value exists only in articles of utility, in objects.... If therefore an article loses its utility, it also loses its value.”

—Marx, Capital, vol. I, chapter VIII: (International, p. 202; Penguin, p. 310.)

Commodity Value

Concrete Labour

Concrete labour (also called "particular labour") is labour which produces use-values.

Distinguishing characteristics of concrete labour include:

  • It is not any concrete labour that conveys value, but socially constituted concrete labour (i.e. labour must take on an abstract quality for value to emerge)
  • Marx regarded the distinction between abstract and concrete labour as being among the most important innovations he contributed to the theory of economic value.

Example: The concrete labour of shoe-making makes a use-value in the form of a shoe.

"On the one hand all labour is, speaking physiologically, an expenditure of human labour power, and in its character of identical abstract human labour, it creates and forms the value of commodities. On the other hand, all labour is the expenditure of human labour power in a special form and with a definite aim, and in this, its character of concrete useful labour, it produces use values.

—Karl Marx, Capital: A Contribution to the Critique of Political Economy, vol. 1 (London: Penguin, 1990), p. 137.

Concrete Labour
Value Form of Exchange Value
Abstract Labour

Abstract Labour

Abstract labour (called "general labour") is concrete labour which has undergone a process of abstraction in society.

Distinguishing characteristics of abstract labour include:

  • In a mode of production which produces value (capitalist, pre-capitalist, and socialist to an extent), concrete labour “becomes the form of manifestation” of abstract human labour. This is due to an equilibration of "concrete labour" into a more general form.
  • Abstract, general quality of labour simply does not acquire the same social significance in non-capitalist societies.

Analogy: Abstract labour is to value what concrete labour is to use-value. Thus, there would be no capital without abstract labour.

"That this necessity of distributing social labour in definite proportions cannot be done away with by the particular form of social production but can only change the form it assumes, is self evident. What can change in changing historical circumstances, is the form in which these laws operate."

—Karl Marx, *Letters to Kugelmann*

"With the disappearance of the useful character of the products of labour, the useful character of the kinds of labour embodied in them also disappears; this in turn entails the disappearance of the different concrete forms of labour. They can no longer be distinguished, but are all together reduced to the same kind of labour, human labour in the abstract.

Let us now look at the residue of the products of labour. There is nothing left of them in each case but the same phantom-like objectivity; they are merely congealed quantities of homogenous human labour, i.e. of human labour-power expended without regard to the form of its expenditure. All these things now tell us is that human labour-power has been expended to produce them, human labour is accumulated in them. As crystals of this social substance, which is common to them all, they are values—commodity values."

—Karl Marx, Capital, vol. 1, p. 128.

"Along with the useful qualities of the products themselves, we put out of sight both the useful character of the various kinds of labour embodied in them and the concrete forms of that labour; there is nothing left but what is common to them all . . . human labour in the abstract."

—Karl Marx, Capital, vol. 1, chapter 1, section 1

Concrete Labour
Value Form of Exchange Value
Abstract Labour

Form of Exchange Value

In a society that produces value, the form of exchange value is said to be one in which exchange-value (usually in terms of a money-price) expresses more than its intrinsic use-value.

Distinguishing characteristics of the form of exchange value include:

  • The form of exchange-value takes precedence over the form of use-value in a capitalist mode of production, because due to abstraction it comes to act independently of use-value.
  • This, more clearly, takes place because exchange-value is what is most evident to humans phenomenologically. Hence, we say the form of exchange-value is a "phenomenal form".
  • The "sufficient quantity" is the utility of the form of exchange-value which is identifiable by social standards. It becomes known whenever this abstraction occurs. Thus, the excess comes from the "outside" of the use-value itself.
  • In the same way, abstract labour tends to dominate concrete labour and for the same reasons of abstraction. This is one additional underlying framework or "behind the scenes" which may further lead to the previous points.

“Therefore, first: the valid exchange-values of a given commodity express something equal: secondly, exchange-value, generally, is only the mode of expression, the phenomenal form, or something contained in it, yet distinguishable from it. […] the exchange-values of commodities must be capable of being expressed in terms of something common to them all, of which thing they represent a greater or less quantity.

This common ‘something’ cannot be either a geometrical, a chemical, or any other natural property of commodities. Such properties claim our attention only in so far as they affect the utility of those commodities, make them use-values. But the exchange of commodities is evidently an act characterized by a total abstraction from use-value is just as good as another, provided only it be present in sufficient quantity.”

-- Karl Marx, p.47

"Hence, we may understand the decisive importance of the transformation of value and price of labour-power into the form of wages, or into the value and price of labour itself. This phenomenal form, which makes the actual relation invisible, and, indeed, shows the direct opposite of that relation, forms the basis of all the juridical notions of both labourer and capitalist, of all the mystifications of the capitalistic mode of production, of all its illusions as to liberty, of all the apologetic shifts of the vulgar economists."

—Karl Marx, "Chapter Three: Money, Or the Circulation of Commodities"

Concrete Labour
Value Form of Exchange Value
Abstract Labour

Equivalent Form

Things can be exchanged on the market because they are always related to a third thing, abstract human labour, which functions as the equivalent form of the commodity.

Marx outlines four "peculiarities" [Eigentümlichkeiten] of the equivalent form, namely:

  • that "use value becomes the form of manifestation, the phenomenal form of its opposite, value",
  • that "that concrete labour becomes the form under which its opposite, abstract human labour, manifests itself,"
  • that "the labour of private individuals takes the form of its opposite, labour directly social in its form", and
  • that "the fetishism of the commodity-form is more striking in the equivalent form than in the relative value-form "

"We have seen that commodity A (the linen), by expressing its value in the use value of a commodity differing in kind (the coat), at the same time impresses upon the latter a specific form of value, namely that of the equivalent. The commodity linen manifests its quality of having a value by the fact that the coat, without having assumed a value form different from its bodily form, is equated to the linen. The fact that the latter therefore has a value is expressed by saying that the coat is directly exchangeable with it. Therefore, when we say that a commodity is in the equivalent form, we express the fact that it is directly exchangeable with other commodities."

-Karl Marx, Kapital, Chapter 1, Section 3

Equivalent Form
Form of Exchange Value Money Form
Relative Form

Relative Form

The commodity which expresses its value in another commodity is said to be of the relative form.

Distinguishing example of the difference between the relative and the equivalent form:

"The statement "20 yards of linen are worth 1 coat" label two forms of value. The first form, the relative form of value, is the commodity that comes first in the statement (the 20 yards of linen in the example). The second form, the equivalent form of value, is the commodity that comes second in the statement (the 1 coat in the example)." Further distinguishing characteristics:

"The relative form and the equivalent form are two intimately connected, mutually dependent and inseparable elements of the expression of value; but, at the same time, are mutually exclusive, antagonistic extremes – i.e., poles [Wertausdruck] of the same expression."

The tautology" 20 yards of linen = 20 yards of linen" expresses no value at all.

" In order to discover how the elementary expression of the value of a commodity lies hidden in the value relation of two commodities, we must, in the first place, consider the latter entirely apart from its quantitative aspect. The usual mode of procedure is generally the reverse, and in the value relation nothing is seen but the proportion between definite quantities of two different sorts of commodities that are considered equal to each other. It is apt to be forgotten that the magnitudes of different things can be compared quantitatively, only when those magnitudes are expressed in terms of the same unit. It is only as expressions of such a unit that they are of the same denomination, and therefore commensurable."

-Karl Marx, Kapital, Chapter 1, Section 1-2

Equivalent Form
Form of Exchange Value Money Form
Relative Form

Money Form

The money form is a "universal equivalent" which can in principle exchange for any product offered for sale.

Distinguishing characteristics of the money form include:

  • It is a means of exchange, facilitating the circulation of commodities.
  • It provides a standard measure of value; a means of accounting for value; and it is the measuring unit of prices.
  • It is a universally accepted means of payment for goods & services rendered, and for debt obligations.
  • It is a means to store value owned, accumulate value, or form hoards of wealth.
  • Usually this is associated with the emergence of a state authority issuing legal currency. At that point the value-form [of money] appears to have acquired a fully independent, separate existence.

"What appears to happen is not that a particular commodity becomes money because all other commodities universally express their values in it, but, on the contrary, that all other commodities universally express their values in a particular commodity because it is money. The movement through which this process has been mediated vanishes in its own result, leaving no trace behind. Without any initiative on their part, the commodities find their own value-configuration ready to hand, in the form of a physical commodity existing outside but also alongside them. This physical object, gold or silver in its crude state, becomes, immediately on its emergence from the bowels of the earth, the direct incarnation of all human labour. Hence the magic of money."

-Marx, Capital, Volume I, Penguin ed., p. 187

Equivalent Form
Form of Exchange Value Money Form
Relative Form

Social Relations Between Things

To say that money expresses "social relations between things" is to emphasize that money exists as (1) a relation between individuals insofar as they belong to a group, or (2) as a relation between groups, or (3) as a relation between an individual and a group.

Distinguishing characteristics of money as a social relation between things includes:

  • that commodities are, vis-a-vis the money-form, expressed in terms of a specific social relation to other commodities implies that the determinate aspects of this relation are the result of historically contingent factors; that is, they are always subject to change.
  • the German word Verhältnis can mean "relation", "proportion", or "ratio". Thus, the relationships could be qualititative, quantitative or both.
  • that the "[f]etishism of commodities has its origin, as the foregoing analysis has already shown, in the peculiar social character of the labour that produces them.

"The categories of bourgeois economy consist of such like forms. They are forms of thought expressing with social validity the conditions and relations of a definite, historically determined mode of production, viz., the production of commodities. The whole mystery of commodities, all the magic and necromancy that surrounds the products of labour as long as they take the form of commodities, vanishes therefore, so soon as we come to other forms of production."

-Marx, Capital, Volume I, Chapter 1, Section 4

Social Relations Between Things
Money Form Market Exchange
Material Relations Between Things

Material Relation Between Things

To say that money expresses a "material relation between things" is to emphasize that money also exists as a connection between the differing aspects of commodity production in the physical labour process itself.

Distinguishing characteristics of money as a material relation between things includes:

  • that the money-form implicitly equates different forms of labour and production to one another
  • In the capitalist mode of production, "[i]t is... precisely this finished form of the world of commodities—the money form—which conceals the social character of private labour and the social relations between the individual workers, by making those relations appear as relations between material objects, instead of revealing them plainly."

"Hence, when we bring the products of our labour into relation with each other as values, it is not because we see in these articles the material receptacles of homogeneous human labour. Quite the contrary: whenever, by an exchange, we equate as values our different products, by that very act, we also equate, as human labour, the different kinds of labour expended upon them. We are not aware of this, nevertheless we do it. Value, therefore, does not stalk about with a label describing what it is. It is value, rather, that converts every product into a social hieroglyphic. Later on, we try to decipher the hieroglyphic, to get behind the secret of our own social products; for to stamp an object of utility as a value, is just as much a social product as language."

-Karl Marx, Capital, Volume 1, Chapter 1, Section 4

"When, therefore, Galiani says: Value is a relation between persons – “La Ricchezza e una ragione tra due persone,” – he ought to have added: a relation between persons expressed as a relation between things. (Galiani: Della Moneta, p. 221, V. III. of Custodi’s collection of “Scrittori Classici Italiani di Economia Politica.” Parte Moderna, Milano 1803.)"

-Marx, Capital, Volume I, Chapter 1, Section 4, footnote 28

Social Relations Between Things
Money Form Market Exchange
Material Relations Between Things

Market Exchange

Market exchange occurs whenever a commodity is bought and sold. Most markets rely on sellers offering their goods or services (including labour) in exchange for money from buyers.

Distinguishing characteristics of market exchange include:

  • In the exchange of goods on the capitalist market, exchange-value rather than use-value dominates. As such, in a market setting, values are transformed into prices.
  • Market exchange takes place where the money-form of social relations between things and the material relation between things collapse together.
  • Marx's labour theory of value is arguably best seen as a "law of grand averages", an overall generalisation about economic exchange based on socially necessary labour time.
  • To Marx, capitalism is tied to the alienation of workers from the means of production: they no longer own what they need to make a living and so must sell their labour in the "free" market to earn money to buy their subsistence needs.

Marx classifies several types of market exchanges:

M-C (an act of purchase: a sum of money purchases a commodity, or "money is changed into a commodity") C-M (an act of sale: a commodity is sold for money) M-M' (a sum of money is lent out at interest to obtain more money, or, one currency or financial claim is traded for another. "Money begets money.") C-C' (countertrade, in which a commodity trades directly for a different commodity, with money possibly being used as an accounting referent, for example, food for oil, or weapons for diamonds) C-M-C' (a commodity is sold for money, which buys another, different commodity with an equal or higher value) M-C-M' (money is used to buy a commodity which is resold to obtain a larger sum of money) M-C...P...-C'-M' (money buys means of production and labour power used in production to create a new commodity, which is sold for more money than the original outlay. "The circular course of capital"

Social Relations Between Things
Money Form Market Exchange
Material Relations Between Things

Owners (Sellers)

Owners, at this stage of the development of Marx's thought, are are phenomenologically distinguishable only as sellers of commodities in an exchange.

Distinguishing characteristics of owners (sellers) include:

  • At this point, Marx is exploring the nature of market exchange. That is, by this stage, he has no present conclusions regarding owners as bourgeoisie and non-owners as proletariat, and class struggle has not as of yet been postulated.
  • With that said, by "owners"/"sellers", Marx is referring to the phenomena of market exchange whereby, phenomenologically, you have the appearance of two parties meeting in a market and exchanging, but without any necessary difference between them.
  • The role of "being an owner", thus, is predominately a social convention instead of a natural one. To put it otherwise, for Marx, there are no "owners" in nature.
  • The simple act of exchange between buyers and sellers is not in and of itself sufficient to generate surplus-value. Money is not yet in the picture.

"The form which circulation takes when money becomes capital, is opposed to all the laws we have hitherto investigated bearing on the nature of commodities, value and money, and even of circulation itself. What distinguishes this form from that of the simple circulation of commodities, is the inverted order of succession of the two antithetical processes, sale and purchase. How can this purely formal distinction between these processes change their character as it were by magic?"

"But that is not all. This inversion has no existence for two out of the three persons who transact business together. As capitalist, I buy commodities from A and sell them again to B, but as a simple owner of commodities, I sell them to B and then purchase fresh ones from A. A and B see no difference between the two sets of transactions. They are merely buyers or sellers. And I on each occasion meet them as a mere owner of either money or commodities, as a buyer or a seller, and, what is more, in both sets of transactions, I am opposed to A only as a buyer and to B only as a seller, to the one only as money, to the other only as commodities, and to neither of them as capital or a capitalist, or as representative of anything that is more than money or commodities, or that can produce any effect beyond what money and commodities can."

-Karl Marx, Kapital Vol. 1, Ch. 5: Contradictions in the General Formula of Capital

"This act produces no increase of exchange-value either for the one or the other; for each of them already possessed, before the exchange, a value equal to that which he acquired by means of that operation.” The result is not altered by introducing money, as a medium of circulation, between the commodities, and making the sale and the purchase two distinct acts. The value of a commodity is expressed in its price before it goes into circulation, and is therefore a precedent condition of circulation, not its result."

-Karl Marx, ibid.

Owners (Sellers)
Market Exchange Money Commodity
Non-owners (Buyers)

Non-owners (Buyers)

Non-owners, at this stage of the development of Marx's thought, are phenomenologically distinguishable only as buyers of commodities in an exchange.

Distinguishing characteristics of non-owners (buyers) include:

  • The same applies here as does with owners (sellers), and it should be noted that these are not fixed positions, but roles that individuals play in exchange which can be switched.
  • Buyers may become sellers, and sellers may become buyers - such is the nature of market exchange. For Marx, the mantra that exchange is mutually beneficial is not contested.
  • In this same section, Marx outlaws two reasons for surplus-value in his attempt to explain the conversion of money into capital. To wit, "....neither on the assumption that commodities are sold above their value, nor that they are bought below their value" explains this phenomena of surplus-value and profit. This is crucial to the understanding of his future development of his critique of capital. The solution, then, comes from without.

"Suppose then, that by some inexplicable privilege, the seller is enabled to sell his commodities above their value, what is worth 100 for 110, in which case the price is nominally raised 10%. The seller therefore pockets a surplus-value of 10. But after he has sold he becomes a buyer. A third owner of commodities comes to him now as seller, who in this capacity also enjoys the privilege of selling his commodities 10% too dear. Our friend gained 10 as a seller only to lose it again as a buyer. The net result is, that all owners of commodities sell their goods to one another at 10% above their value, which comes precisely to the same as if they sold them at their true value. Such a general and nominal rise of prices has the same effect as if the values had been expressed in weight of silver instead of in weight of gold. The nominal prices of commodities would rise, but the real relation between their values would remain unchanged. "

-Karl Marx, Kapital Vol. 1, Chapter Five: Contradictions in the General Formula of Capital.

" It is therefore impossible for capital to be produced by circulation, and it is equally impossible for it to originate apart from circulation. It must have its origin both in circulation and yet not in circulation. We have, therefore, got a double result.

"The conversion of money into capital has to be explained on the basis of the laws that regulate the exchange of commodities, in such a way that the starting-point is the exchange of equivalents. Our friend, Moneybags, who as yet is only an embryo capitalist, must buy his commodities at their value, must sell them at their value, and yet at the end of the process must withdraw more value from circulation than he threw into it at starting. His development into a full-grown capitalist must take place, both within the sphere of circulation and without it. These are the conditions of the problem. Hic Rhodus, hic salta!"

-Karl Marx, ibid.

Owners (Sellers)
Market Exchange Money Commodity
Non-owners (Buyers)

Money Commodity

A money commodity is a money whose value comes from a commodity of which it is made.

Distinguishing characteristics of money commodities include:

  • Commodity money consists of objects that have value in themselves as well as value in their use as money.
  • It may be useful to think of this as an iterated effect of market exchange. Interest, for example, is classified by Marx as the "money of money". Here, Marx and Freud are arguably on the same page. That said, there is much discussion on zombies and being brainless in general because of what Freud calls the death drive.
  • This concept opens up the dialectic of the two-fold bifurcation of money as a means of circulation on one hand and as a measure of value on the other.

Examples of commodities that have been used as mediums of exchange include gold, silver, copper, peppercorns, large stones (such as Rai stones), decorated belts, shells, alcohol, cigarettes, cannabis, candy, barley, laundry detergent, etc. Most recently, fiat currency and paper money takes up this role.

It is also here where the nature of surplus-value begins to be revealed.

"That which is for me through the medium of money – that for which I can pay (i.e., which money can buy) – that am I myself, the possessor of the money. The extent of the power of money is the extent of my power. Money’s properties are my – the possessor’s – properties and essential powers.

Thus, what I am and am capable of is by no means determined by my individuality. I am ugly, but I can buy for myself the most beautiful of women. Therefore I am not ugly, for the effect of ugliness – its deterrent power – is nullified by money. I, according to my individual characteristics, am lame, but money furnishes me with twenty-four feet. Therefore I am not lame. I am bad, dishonest, unscrupulous, stupid; but money is honoured, and hence its possessor. Money is the supreme good, therefore its possessor is good. Money, besides, saves me the trouble of being dishonest: I am therefore presumed honest.

I am brainless, but money is the real brain of all things and how then should its possessor be brainless? Besides, he can buy clever people for himself, and is he who has [In the manuscript: ‘is’. – Ed.] power over the clever not more clever than the clever? Do not I, who thanks to money am capable of all that the human heart longs for, possess all human capacities? Does not my money, therefore, transform all my incapacities into their contrary?"

-Karl Marx, The Power of Money

Owners (Sellers)
Market Exchange Money Commodity
Non-owners (Buyers)

Measure of Value

Money, qua measure of value, becomes a universal equivalent by which its own value is measured directly against the exchange-value of other commodities.

Distinguishing characteristics of measure of value includes:

  • In brief, " [or fiat currency, for instance] becomes the measure of value only because the exchange-value of all commodities is estimated in terms of gold."
  • To be a measure of value, this money must also represent a dynamic or variable value (a "flexibility" or "liquidity") so as to be able to respond to all market fluctuations.
  • The link to labour-time must not be forgotten in this, because the value of money "...will fall or rise equally in relation to all other commodities and will thus for all of them continue to represent a definite volume of labour-time."
  • As the measure of value, the universal equivalent becomes the "standard of price".

"Gold [his example of money] becomes the measure of value because the exchange-value of all commodities is measured in gold, is expressed in the relation of a definite quantity of gold and a definite quantity of commodity containing equal amounts of labour-time. To begin with, gold becomes the universal equivalent, or money, only because it thus functions as the measure of value and as such its own value is measured directly in all commodity equivalents. The exchange-value of all commodities, on the other hand, is now expressed in gold.

One has to distinguish a qualitative and a quantitative aspect in this expression. The exchange-value of the commodity exists as the embodiment of equal uniform labour-time, the value of the commodity is thus fully expressed, for to the extent that commodities are equated with gold they are equated with one another. Their golden equivalent reflects the universal character of the labour-time contained in them on the one hand, and its quantity on the other hand.

The exchange-value of commodities thus expressed in the form of universal equivalence and simultaneously as the degree of this equivalence in terms of a specific commodity, that is a single equation in which commodities are compared with a specific commodity, constitutes price. Price is the converted form in which the exchange-value of commodities appears within the circulation process."

-Karl Marx, A Contribution to the Critique of Political Economy, Part II: Money of Simple Circulation

Measure of Value
Money Commodity Money
Means of Circulation

Means of Circulation

Money, qua means (medium) of circulation, operates also as a means of exchange; but not however, as "a medium of exchange in general, but a medium of exchange adapted to the process of circulation, i.e., a medium of circulation".

Distinguishing characteristics of a means of circulation include:

The metamorphosis of commodities by either C—M—C (selling in order to purchase) or M—C—M' (money is used to buy a commodity which is resold to obtain a larger sum of money) circuits in circulation

See below in the comments for the seven types of commodity trade.

"When, as a result of the establishing of prices, commodities have acquired the form in which they are able to enter circulation and gold has assumed its function as money, the contradictions latent in the exchange of commodities are both exposed and resolved by circulation. The real exchange of commodities, that is the social metabolic process, constitutes a transformation in which the dual nature of the commodity – commodity as use-value and as exchange-value – manifests itself; but the transformation of the commodity itself is, at the same time, epitomised in certain forms of money.

To describe this transformation is to describe circulation. Commodities, as we have seen, constitute fully developed exchange-value only when a world of commodities and consequently a really developed system of division of labour is presupposed; in the same manner circulation presupposes that acts of exchange are taking place everywhere and that they are being continuously renewed. It also presupposes that commodities enter into the process of exchange with a determinate price, in other words that in the course of exchange they appear to confront one another in a dual form – really as use-values and nominally (in the price) as exchange-values."

-Karl Marx, A Contribution to the Critique of Political Economy, Part II: Money or Simple Circulation

“All the differentiations in capital arising from the circulation process—in fact the circulation process itself—are actually nothing but the metamorphosis of commodities (determined by their relationship to wage-labor as capital) as an aspect of the reproduction process.”

— Marx, TSV, 3:268.

Measure of Value
Money Commodity Money
Means of Circulation


Money, as we have seen, is both a (1) measure of value and (2) a medium of circulation.

Marx notes that "Shakespeare brings out two properties of money in particular:

  • It is the visible divinity, the transformation of all human and natural qualities into their opposites, the universal confusion and inversion of things; it brings together impossibilities.
  • It is the universal whore, the universal pimp of men and peoples."
  • Furthermore, the "function of money as means of payment begins to spread out beyond the sphere of circulation of commodities. It becomes the universal material of contracts."

“If money is the bond binding me to human life, binding society to me, binding me and nature and man, is not money the bond of all bonds? Can it not dissolve and bind all ties? Is it not, therefore, the universal agent of separation?”

-Karl Marx

Measure of Value
Money Commodity Money
Means of Circulation


A person or institution that owes a sum of money.

Distinguishing characteristics of debtors include:

  • The debtor/creditor relationship emerges out of the circulation of money as a means of payment.
  • Here, Marx's sociological observations are especially important, as the debtor becomes structurally dependent upon the creditor due to the transfer of debt in the abstract.
  • This relationship yields the concept of capital, which is central to the remainder of Marx's analysis.

"So far, therefore, as his actions are a mere function of capital — endowed as capital is, in his person, with consciousness and a will — his own private consumption is a robbery perpetrated on accumulation, just as in book-keeping by double entry, the private expenditure of the capitalist is placed on the debtor side of his account against his capital. To accumulate, is to conquer the world of social wealth, to increase the mass of human beings exploited by him, and thus to extend both the direct and the indirect sway of the capitalist."

-Karl Marx, Kapital Vol. I, Ch. 24, Section 3 - Separation of Surplus-Value into Capital and Revenue. The Abstinence Theory

Such bills of exchange in their turn circulate as means of payment until the day on which they fall due; and they form commercial money in the strict meaning of the term. To the extent that they ultimately balance one another by the compensation of credits and debts, they serve absolutely as money, since no transformation into actual money takes place. Just as these mutual advances of the producers and merchants to one another form the real foundation of credit, so their instrument of circulation, the bill of exchange, forms the basis of credit money proper, of bank notes, etc. These do not rest upon the circulation of money, whether it be metallic money or government paper money, but upon the circulation of bills of exchange.

-Karl Marx, Kapital Vol. III, Part V, Chapter XXV : CREDIT AND FICTITIOUS CAPITAL.

Money Capital


A person or company to whom money is owed.

Distinguishing characteristics of creditors include:

  • The relationship between debtor and creditor and exemplifies the idea of the transfer of debt. This is important because the "function of money as means of payment begins to spread out beyond the sphere of circulation of commodities. It becomes the universal material of contracts."
  • With the advent of contracts, among other similarly related social institutions and constructs, due to fixed payments, debtors are forced to hoard money in preparation for these dead-lines. It is this inequity between creditor and debtor which gives rise to an imbalance in the capitalist mode of production, and thus to class struggle.
  • In other words, all else being equal, if production fails to grow sufficiently, the level of debt will increase, ultimately causing a breakdown of the accumulation process when debtors cannot pay creditors.
  • Marx denies that commerce adds value. The debtors and the creditors could just as easily have met in a marketplace without a merchant to facilitate exchange.

"It is no longer a mere accident that capitalist and labourer confront each other in the market as buyer and seller. It is the process itself that incessantly hurls back the labourer on to the market as a vendor of his labour power, and that incessantly converts his own product into a means by which another man can purchase him."


Money Capital


Capital is self-expanding value, or a value which generates surplus value (and hence more capital) as the result of exploitation of wage labor.

Distinguishing characteristics of capital include:

  • Money can be used as capital, but this is not necessarily so. This is because capital is not the same as mere money, but it is a term for the wealth which includes money, land, buildings, machinery, and labour whose purpose (telos) is the production of more wealth.
  • If an ordinary person, a worker, has some money saved up, or still available at the end of the month, that is not “capital”! The reason is that the worker has no way of making use of that money to create more value, more capital. The capitalist, however, is somebody who does have that ability because the capitalist owns the means of production whereas the worker does not.
Money Capital

Value in Process

Capital, therefore, has value only in circulation or in process of exchange.

The transformation of a labor-product into a commodity (its "marketing") is in reality not a simple process, but has many technical and social preconditions. These often include:

  • the existence of a reliable supply of a product, or at least a surplus or surplus product.
  • the existence of a social need for it (a market demand) that must be met through trade, or at any event cannot be met otherwise.
  • the legally sanctioned assertion of private ownership rights to the commodity.
  • the enforcement of these rights, so that ownership is secure.
  • the transferability of these private rights from one owner to another.
  • the right to buy and sell the commodity, and/or obtain (privately) and keep income from such trade
  • the (physical) transferability of the commodity itself, i.e. the ability to store, package, preserve and transport it from one owner to another.
  • the imposition of exclusivity of access to the commodity.
  • the possibility of the owner to use or consume the commodity privately.

guarantees about the quality and safety of the commodity, and possibly a guarantee of replacement or service, should it fail to function as intended.

Value in Process
Capital Buying/Selling Labour Power


According to Marx, "[t]he surplus value produced within a given period of circulation, when measured against the total capital which has been advanced, is called — profit."

Distinguishing characteristics of profit include:

  • Profit is thus best understood as the value of the commodities produced by the workers after deducting their wages, the cost of raw materials and the overhead.
  • Profit stands in dialectical opposition to "value in process" insofar as profit is removed from the circulation of capital and thus is not in process.

"Surplus-value and the rate of surplus-value are... the invisible essence to be investigated, whereas the rate of profit and hence the form of surplus-value as profit are visible surface phenomena"

- Karl Marx, Capital Vol. 3, Pelican edition, p. 134

"Under "profit" is included not only interest — known to be a mere portion of the total profit — but also the rent of land, which is nothing but a part of the capital employed in agriculture."

“The rate of profit is the motive power of capitalist production. Things are produced only so long as they can be produced with a profit.”

-Marx, Capital, vol. III, ch. XV, part III: (International ed., p. 259; Penguin ed., p. 368.)

“A part of the surplus-value realized in profit, i.e., that part which assumes the form of interest on capital laid out (whether borrowed or not), appears to the capitalist as outlay, as production cost which he has as a capitalist, just as profit in general is the immediate aim of capitalist production. But in interest (especially on borrowed capital), this appears also as the actual precondition of his production.

“At the same time, this reveals the significance of the distinction between the phenomena of production and of distribution. Profit, a phenomenon of distribution, is here simultaneously a phenomenon of production, a condition of production, a necessary constituent part of the process of production. How absurd it is, therefore, for John Stuart Mill and others to conceive bourgeois forms of production as absolute, but the bourgeois forms of distribution as historically relative, hence transitory. I shall return to this later. The form of production is simply the form of distribution seen from a different point of view. The specific features—and therefore also the specific limitation—which set bounds to bourgeois distribution, enter into bourgeois production itself, as a determining factor, which overlaps and dominates production.”

—Marx, TSV, 3:83-84.

Value in Process
Capital Buying/Selling Labour Power

Buying and Selling of Labour Power

"Labour-power can appear upon the market as a commodity, only if, and so far as, its possessor, the individual whose labour-power it is, offers it for sale, or sells it, as a commodity."

Distinguishing characteristics of buying and selling labour power include:

"[T]he labourer instead of being in the position to sell commodities in which his labour is incorporated, must be obliged to offer for sale as a commodity that very labour-power, which exists only in his living self."

The free labourer confronts the owner of money on the market because he requires subsistence and lacks the means of production.

"The value of labour-power is determined, as in the case of every other commodity, by the labour-time necessary for the production, and consequently also the reproduction, of this special article. So far as it has value, it represents no more than a definite quantity of the average labour of society incorporated in it. Labour-power exists only as a capacity, or power of the living individual. Its production consequently pre-supposes his existence. Given the individual, the production of labour-power consists in his reproduction of himself or his maintenance.

For his maintenance he requires a given quantity of the means of subsistence. Therefore the labour-time requisite for the production of labour-power reduces itself to that necessary for the production of those means of subsistence; in other words, the value of labour-power is the value of the means of subsistence necessary for the maintenance of the labourer. Labour-power, however, becomes a reality only by its exercise; it sets itself in action only by working."

—Karl Marx, Capital Volume One, Chapter Six: The Buying and Selling of Labour-Power

Value in Process
Capital Buying/Selling Labour Power


At this stage, capital expresses the socioeconomic relations of production between the two principal classes in capitalist society—the capitalists (or bourgeoisie) and the workers (proletariat).

Distinguishing characteristics of capital include:

  • If you'll notice, we've already had a section on capital. These two sections are not to be confused insofar as the first section deals with capital as a proper economic entity, and this section deals with the social economy taken as a whole.
  • As such, the opposition between this second appearance of capital and labour is what generates class struggle as the revealed object of Marx's analysis of the capitalist mode of production.

“Capital is dead labour, that, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks.”

——Marx, Capital, Vol. I, ch. 10, sect 1. (Penguin ed., p. 342.)

“... capital is a certain relation between people, a relation which remains the same whether the categories under comparison are at a higher or a lower level of development. Bourgeois economists have never been able to understand this; they have always objected to such a definition of capital.

“To regard the categories of the bourgeois regime as eternal and natural is most typical of bourgeois philosophers. That is why, for capital, too, they adopt such definitions as, for example, accumulated labor that serves for further production—that is, describe it as an eternal category of human society, thereby obscuring that specific, historically definite economic formation in which this ‘accumulated labor,’ organized by commodity economy, falls into the hands of those who do not work and serves for the exploitation of the labor of others. That is why, instead of an analysis and study of a definite system of production relations, they give us a series of banalities applicable to any system, mixed with the sentimental pap of petty-bourgeois morality.”

——Lenin, “What the ‘Friends of the People’ Are” (1894), LCW 1:217.

Buying/Selling Labour Power Class Struggle


Distinguishing characteristics of labour include:

Buying/Selling Labour Power Class Antagonism

Class Struggle

The motor force of history.

Distinguishing characteristics of class struggle include:

  • Labour (the proletariat or workers) includes anyone who earns their livelihood by selling their labor power and being paid a wage or salary for their labor time. They have little choice but to work for capital, since they typically have no independent way to survive.
  • Capital (the bourgeoisie or capitalists) includes anyone who gets their income not from labor as much as from the surplus value they appropriate from the workers who create wealth. The income of the capitalists, therefore, is based on their exploitation of the workers (proletariat).
  • At this stage, production itself becomes a social enterprise.

"The history of all hitherto existing society is the history of class struggles. Freeman and slave, patrician and plebian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another...."

—Marx and Engels, Communist Manifesto

Buying/Selling Labour Power Class Struggle