Chapter 2: The Process of Exchange

Outline of Marx's Discussion

Analysis of fetishism means we must move from study of commodities to that of their owners.
– possession
– embodied will
– consenting alienation
– private property and contract
Contradiction: commodities must be:
– values before use-values
– use-values before values
– resolution = exchange
Money - "crystallizes" out of exchange

History of Exchange

– reciprocity instead of exchange
– exchange of excess
– production for exchange
– emergence of money

Commentary

Here Marx responds to his critique of the fetishism of his own presentation in Sections 1–3 of Chapter 1 because it only dealt with the relationships between commodities independently of the social relations of which they are a part.

From Things to Social Processes

Against his previous descriptions of commodities “doing this” and “doing that” (e.g., expressing value here, reflecting an essence there), he notes that “commodities cannot themselves go to market. . . we must, therefore have recourse to their guardians.”(1) In so doing, we pass from the abstract world of Chapter 1, to the more realistic world of actual exchange—to the market where the owners of commodities meet, trade and realize the form of value.

Marx starts with an analysis of the relation between commodities and their owners, then passes to a summary of the logic of money as a requirement of generalized exchange, and finally to a sketch of the historical emergence of exchange and money. His analysis of the relations between commodities and their owners, and among owners, is very close to Hegel’s in his Philosophy of Right (1820).(2)

1. Owners have possession of commodities
2. Owners are in relation to each other as having their "will" in the objects
3. Alienation of commodities only occurs in consenting acts
4. Juridical expression of this is private property and contracts of exchange

The primary and most fundamental example of this in capitalism is the exchange of labor-power for the means of subsistence. In that case, we have already seen in Part VIII the meaning of the above four conditions. The worker must have possession of his labor-power (not be a slave or a serf). The capitalist must have possession of the means of production (having taken them from the workers). Given this pattern of possession, the two parties are "free" to act. This "freedom" appears as an act of free "will" as well as an act between two freely consenting property owners. That Marx goes beyond Hegel on this was already apparent in Part VIII in his ironic attack on the meaning of such "freedom." This will recur in Chapter 6 on the "Sale and Purchase of labor-power." Finally, the exchange of labor-power for the means of subsistence takes the form of a legal contract, verbal or written. The union contract formed through collective bargaining being a recent formal example.

The introduction of the owner adds concreteness to the analysis of the exchange process, partly because the owner, unlike the commodity, is not interested in just any exchange but in some specific exchange. "[The commodity] is always ready to exchange not only soul, but body, with each and every other commodity. . . the owner makes up for this lack [of specificity] in the commodity of a sense of the concrete, physical body of the other commodity by his own five and more senses?"(3) In other words, the owner goes into the market with a will, with the objective of acquiring some other particular commodity—directly, in the case of barter, indirectly in the case of markets where money is used.

At this point Marx points out a contradiction—an analysis carried over from his earlier work A Contribution to the Critique of Political Economy (1859) and from his analysis in Chapter 1 of the two sides of the commodity: use-value and exchange-value. First, sellers' only interest in their own commodities are their exchange-values, "for himself its only direct use-value is as a bearer of exchange-value. . . all commodities are non-use-values for their owners. . . consequently [and this is the first point] commodities must be realized as values [which is to say exchanged] before they can be realized as use-values [consumed]." Second, to be exchanged someone must see them as potential use-values: "they must stand the test as use-values before they can be realized as values."(4) There is the contradiction. Before they can be use-values they must be exchange-values but before they can be exchange-values they must be use-values. To be complete as commodities they must be both.

Money in Exchange

In this contradiction Marx sees the origin of the need for money in exchange. In so far as each owner of commodities looks at other commodities "as the particular equivalent of his own commodities [and]. . . his own commodity is the universal equivalent for all others. . . there is in fact no commodity acting as universal equivalent.” This problem was already discussed in Chapter 1 more abstractly (the problem of the expanded form) and the solution perceived: the money form. But this, he notes, cannot be solved in the abstract, at the formal level of Chapter 1:

Only the action of society can turn a particular commodity into the universal equivalent . . . through the agency of the social process it becomes the specific social function of the commodity which has been set apart to be the universal equivalent. It thus becomes—money. Money necessarily crystalizes out of the process of exchange.(5)

In other words, the rise of the universal equivalent, i.e., money, is a concrete social phenomenon, not an abstract one; it emerges within the historical development of exchange. It comes with the “broadening and deepening of the phenomenon of exchange.” The “need to give an external expression to this opposition [between use-value and exchange-value] for the purposes of commercial intercourse produces the drive towards an independent form of value.” So, money within exchange is the historical outgrowth of the exchanging of commodities by their owners. Here again Marx fights the fetishism which would deal with these matters purely in terms of the relations between things.

The rest of this chapter is devoted to a sketch of the process by which money as universal equivalent emerged from widening exchange. Howsoever accurate Marx's treatment, the major methodological point is that we must locate this phenomenon in the real world of exchange, understand what is being designated by the term universal equivalent, money, and not be bemused by commodity fetishism into an equally mistaken money fetishism. As he terminates the chapter: "The riddle of the money fetish is therefore the riddle of the commodity fetish, now become visible and dazzling to our eyes."(6)

Then and Now

1. There is no reciprocal isolation or foreigness in the "primitive" community—whether of patriarchal family, Indian commune, or Inca state
2. Exchange begins at the boundaries of communities, not produced for exchange
3. Commodities come to be produced for exchange
4. Repetition makes normal, fixes values at definite magnitudes
5. Articles come to only momentary equivalence with universal equivalent, comes and goes
6. The universal equivalent rystallizes out as money form—attached to most important articles of exchange from outside, or to local mobile wealth, i.e., cattle
7. Natural selection leads to money commodity being chosen among those that can be divisible at will, uniform in quality, i.e., precious metals
8. Value of money is determined by labor time of its production, expressed in other commodities.

All of this is a synopsis of his discussion in the Contribution To The Critique of Political Economy and in the Grundrisse's chapter on money, both of which can be consulted for a more developed analysis.

This sketch of the historical origins of money has led some to interpret this chapter, as well as Chapters 1 and 3, as being about money in all kinds of society where money and exchange have existed, not just about money and exchange in capitalism. Of such interpretations I say: the primary analysis in each chapter in Part One is about the determinations of exchange within a fully developed system of exchange. The only fully developed system of exchange is capitalism, for reasons that are presented in Part VIII and elsewhere (Volume II, Part One). Certainly, he does give examples, such as those above, which draw on pre-capitalist societies, while making the point that money as universal equivalent is not an abstraction but designates a real social phenomenon within the history of exchange.(7) And at times he points to the historical roots of various aspects of capital. Here it is money; in Volume III it is merchant capital, rent, etc. But I would recall his discussion in the Introduction to the Contribution about bourgeois economy providing the key to the past, but not equating the past with the present.(8)

Commodification of Life

One aspect of Marx's analysis of the centrality of exchange in capitalism which has struck a sympathetic cord in many, even those who would never call themselves Marxists, is how, in the pursuit of profit and social control capitalism tends to convert almost every thing and every relation into a commodity. This tendency toward the "commodification of life" has been recognized and deplored by a great many novelists, poets, social commentators and song writers. From Balzac's caustic condemnations of an infinitely invasive commerical logic to popular music, the tendency has long been denounced, made fun of and rejected in prose and lyrics.

In reggae musician Jimmy Cliff's song "Commercialization" this aspect of capitalist Babylon is attacked vigorously. He decries the commercialization—"the notion of capitalist civilization—of women, people in general, food, drugs, war and time.(9) Although written long before the Gulf War, its arcade video packaging and selling gives the lyrics about war an unfortunately all too contemporary relevance.

Commercialization from observation of this civilization Woman! Woman! Woman! Woman! Advertise her Sterilize her Utilize her Commercialize her Cause commercialization is the notion of the civilization People People What kind of people? What kind of people? Civilize them Brutalize them Formalize them Commercialize them Cause commercialization is the notion of the civilization Food Food Drugs Drugs Commercialize it Advertise it Fertilize it Commercialize it Cause Commercialization is the notion of the civilization

War War War War Investigate it Instigate it Motivate it Commercialize it Cause commercialization is the notion of the civilization Time is running out Right here Time! Yes, time is running out Right here There isn't much left Yes, time for people is Running out right here There isn't much left No, there isn't because they have Utilized it Mobilized it Brutalized it Commercialized it Cause commercialization is the notion of civilization Jimmy Cliff

More lighthearted Tom Waits' song "Step Right Up" from the mid-1970s, is more makes carnivalesque fun of advertising and the pretence that any and all problems can be solved by the purchase of some commodity, from the drudgery of housework to fears about personal appearance and relationships.(10) Interlaced with a myriad sound bites of advertising hype and sexual inuendo is the real message of the song: all the junk is being sold for profit at the expense of the buyer ("how do we do it? Volume, volume turn up the volume", "we'll give you the business", "the large print giveth and the small print taketh away.") In this case the very length of the song is both a reproduction and a critique of the endlessness of the advertising noise that constantly bombards us all.

Step Right Up Step right up Step right up Everyone's a winner Bargains galore That's right you too can be The proud owner of the Quality goes in before the name goes on One tenth of a dollar One tenth of a dollar We've got service after sales How bout perfume we got perfume How bout an engagement ring Somethin for the little lady Somethin for the little lady Somethin for the little lady Three for a dollar We got a year end clearance We got a white sale and smoke damaged furniture You can drive it away today Act now Act now And receive as our gift to you They come in all colors One size fits all No muss No fuss No spill You tire of Kitchen drudgery Everything must go Goin' out of business Goin' out of business Goin' out of business sale 50% off original retail price Skip the middle man Don't settle for less How do we do it? How do we do it? Volume, volume, turn up the volume Advertisers Don't hesitate Don't be caught with your drawers down Don't be caught with your drawers down Step right up Step right up That's right For ladies it chops, doesn't stop Never stops, lots of luck!

It'll mow your lawn And it picks up the kids from school And it gets rid of unwanted facial hair It gets rid of embarassing age spots It delivers the pizza And it lengthens And it strengthens And it finds that slipper that's been at large under the chaise-lounge for several weeks And it plays a mean rythmn master And it makes excuses for unwanted lipstick on your collar And it's only a dollar Step right up And it's only a dollar Step right up It forges your signature If not completely satisfied mail back unused portion for complete refund of price of purchase Step right up Please allow thirty days for delivery Don't be fooled by cheap imitations Livin it Livin it, laughtin it, lovin it, swim in it, sleep in it, live in it, swim in it, laugh in it, love in it Removes embarassing stains from contour sheets. That's right And it entertains visiting relatives It turns a sandwitch into a banquet Tired of being the life of the party Change your shorts Change your life Change your life Change into a 9 year old Hindu boy Get rid of your wife It walks your dog It doubles on Sax Jump back Jack See you later alligator See you later alligator It steals your car It gets rid of your gambling debts It quits smoking It's a friend It's a companion It's the only product you'll ever need Follow these easy assembly instructions It never needs ironing It takes weight off hips busts, thighs, chin, middrif

Gives you dandruff It finds you a job It is a job And it strips the phone company free Take ten for five exchange It gives you denture breath And you know it's a friend It's a companion And it gets rid of your travellers checks It's new It's improved It's old fashioned It takes care of business Never needs winding Never needs winding Never needs winding It gets rid of blackheads Heart break of psoriasis Christ you don't know the meaning of heartbreak buddy Come on, come on, come on It's effective It's defective It creates household odors It disinfects It sanitizes For your protection It gives you an erection That wins the election Why put up with painful corns any longer It's a redeemable coupon No obligation No salesman will visit your home We got a jackpot Jackpot, jackpot Prizes! Prizes! Prizes! All work guaranteed How do we do it? How do we do it? How do we do it? We need your business We're going out of business We'll give you the business Get on the business Going out of business sale Receive all Free brochure Free brochure

Read the easy to follow assembly instructions Batteries not included Send before midnite tomorrow Terms available Step right up Step right up Step right up You got it buddy The large print giveth And the small print taketh away Step right up Step right up Step right up Com'on step right up Get away from me kid Step right up Step right up right up right up right... Come on, come on Etc. Tom Waits, Small Change, 1976 Elecktra/Asylum/Nonesuch Records Asylum 7E-1078

In 1979 the British rock group The Clash also took up this theme more directly, attacking the idea that one can buy a “personality” through the purchase of commodities. Instead of being a “happy shopper” constructing his life through his purchases, the singer in “Lost in the Supermarket” wanders confused amidst the mountains of commodities.(11) He has done as the ads say, clipped his coupons, listened to the “hit” music and drunk his bottle of social brew; but lo and behold, the alienation doesn’t go away no matter how much he participates in “exchange.”

Lost in the Supermarket Chorus: I'm all lost in the supermarket I can no longer shop happily I came in here for the special offer of guaranteed personality I wasn't born so much as I fell out Nobody seemed to notice me We had a hedge back at home in the suburb Over which I never could see I heard the people who live on the ceiling Scream and fight scarily Hearing that noise was my first ever feeling That's how its been all around me. Chorus I'm all tuned in. I see your programs I save coupons packets of tea I've got my giant hit discoteque album I empty a bottle I feel a bit free The kids in the halls and the pipes in the walls, Make me noises for company. Long distance callers Make long distance calls And the silence makes me lonely Chorus It's not here It disappear Chorus Repeat I'm all lost... I'm all lost in the supermarket I'm all lost... I can no longer shop happily I'm all lost... I came in here for the special offer of guaranteed personality I'm all lost... The Clash, London Calling, CBS, 1979 (E2 36328)

Finally, the Reagan years (1981–89) of “greed is good” justifying tax breaks for the rich, the Bush II years (2001–09) of war, economic crisis and more tax breaks for the rich, and Trump’s most recent (2017) additional tax breaks for the one percent have only reinforced such critical views of the commercialization of life and the narrow concept of self-interest that pervades the ideology that has accompanied it. Such critique has found its way into the repertoires of even the most popular, non-radical rock and country singers. One example is Shania Twain in "Ka-ching!" (2003) who mocks/laments the capitalist seduction that "more is better," the compulsion to buy, the dangers of credit and the notion that having more money and the stuff it buys brings happiness.(12)

Ka-Ching! We live in a greedy little world - that teaches every little boy and girl To earn as much as they can possibly - then turn around and Spend it foolishly We've created us a credit card mess We spend the money that we don't possess Our religion is to go and blow it all So it's shoppin' every Sunday at the Mall All we ever want is more A lot more than we had before So take me to the nearest store Can you hear it ring It makes you wanna sing It's such a beautiful thing - Ka-ching! Lots of diamond rings The happiness it brings You'll live like a king With lots of money and things When you're broke go and get a loan Take out another mortgage on your home consolidate so you can afford To go and spend some more when you get bored

All we ever want is more A lot more than we had before So take me to the nearest store Can you hear it ring It makes you wanna sing It's such a beautiful thing - Ka-ching! Lots of diamond rings The happiness it brings You'll live like a king With lots of money and things Let's swing Dig deeper in your pocket Oh, yeah, ha Come on I know you've got it Dig deeper in your wallet Oh All we ever want is more A lot more than we had before So take me to the nearest store Can you hear it ring It makes you wanna sing It's such a beautiful thing - Ka-ching! Lots of diamond rings The happiness it brings You'll live like a king With lots of money and things Can you hear it ring It makes you want to sing You'll live like a king With lots of money and things Ka-ching! Shania Twain, UP!, Mercury Records, CD 088 170 314-2, 2002.

Recommended Further Reading

For Hegel's discussion, on which Marx draws, see T. M. Knox (ed) Hegel's Philosophy of Right, Oxford: Clarendon Press, 1952, First Part: "Abstract Right", Section i: "Property" and Section ii: "Contract". You might also want to read the 1820 preface which contains Hegel's famous remark about the limits of philosophy: "The owl of Minerva spreads its wings only with the falling of the dusk." (p. 13) as well as the Third Part: section ii on "Civil Society"; Subsection a on the "System of Needs" contains his discussion of needs, work, capital and class divisions.

Marx's work The Contribution to the Critique of Political Economy (1859), which deals primarily with value and money, was the first published fruit of his work in the late 1850s that produced the long unpublished manuscript the Grundrisse (1857-58). The Contribution to the Critique was intended as the opening salvo of a series of works critiquing political economy but instead of following it up with the next parts, Marx wound up writing Capital instead, whose first volume was published in 1867. Despite the fact that some of the Contribution is included in Capital (and some in Marx's three volume Theories of Surplus Value), there is much material in it which provides useful alternative formulations to the first part of Capital on value and money. The same, of course, is true of the first chapter of Grundrisse manuscripts which also deals with value and money. Both the Contribution and the Grundrisse are available on-line and in Karl Marx and Frederick Engels, Collected Works, New York: International Publishers; the former can be found in Volume 29 and the latter in Volumes 28-29. The Grundrisse is also available in a Penguin paperback edition.

Along with Marx's own review of the history of the development of money and exchange, you might also want to look at Ernest Mandel's discussion in Chapter 2 of Volume I of his Marxist Economic Theory, New York: Monthly Review Press, 1962. At the same time you might also want to keep in mind that Mandel is a Trotskyist theorist whose understanding of these matters is quite different than the one I have been presenting to you. (Remember he is also the author of the introduction to the edition of Capital which you are using.) Another Marxist treatment, more thorough, is Pierre Vilar, A History of Gold and Money, 1450-1920, New York: Verso, 1991 (originally published in Spain in 1960).

There are many works by historians on the history of money and exchange and it has been a central area of contention in anthropology where "formalist" anthropologists have sought to find bourgeois rationality (homo economicus) in every society and "structuralist" anthropologists have sought to understand non-capitalist systems of exchange in their own right as alternative forms of social interaction. Among the latter, some of the most interesting work is by ex-Marxist Karl Polanyi whose book The Great Transformation, Boston: Beacon Press, 1944 is a classic and well worth the read. Polanyi abandons Marx's framework of understanding the modern world in terms of "capitalism" in favor of "the market economy" but the subject is the same and and a great deal can be learned from studying his work. The Fall 1987 issue of Telos magazine has a special section on Polanyi with an interesting overview of his life and work by his daughter Kari Polanyi-Levitt and Marguerite Mendell.

On the commodification of war (as in Jimmy Cliff's song "Commercialization", see Doug Kellner, The Persian Gulf TV War (1992) on how the pentagon and the news networks packaged and sold the Gulf War to the American people -against one of the most rapidly mobilized and nationwide anti-war movements in U.S. history. For further background see his earlier book: Television and the Crisis of Democracy, Boulder: Westview Press, 1990.

Concepts For Review

Questions For Review

2. Discuss the relationship between commodities and their owners as Marx analyses it here in Chapter Two. What is an "owner?" What is the distinction between "ownership" and "possession?"

3. Discuss the meaning of "freedom" with respect to commodity exchange.

4. What is the attitude of the owners of commodities toward those commodities when they want to exchange them. How do they look at those commodities? What is it about their commodities which concerns them first of all? What else must concern them if they are to actually realize an exchange?

*5. Explain the contradiction and the resolution of the contradiction that Marx says confronts commodities and their owners in exchange.

6. What does it mean to say that "money necessarily crystalizes out of the process of exchange?"

*7. Discuss the issue as to whether the analysis of Chapter Two is applicable to all forms of exchange or only to that within capitalism.

8. What new things do we learn about money in this chapter that we had not already learned in Chapter One?

*9. Apply the analysis of this chapter to the exchange of labor power for the wage.

10. Sketch the history that Marx cites of the development of exchange and money. What do you think is the relationship between this history and the presentation of the chapter?

11. Explain the solution to the "riddle" Marx refers to in his statement: "The riddle of the money fetish is therefore the riddle of the commodity fetish, now become visible and dazzling to our eyes."

12. If, in so-called "primitive" societies, people produced and shared collectively, or communally, with a division of labor, such that "exchange" relations were those of reciprocity and had no sense of "equality," what does this suggest about the possibilities of post-capitalist society?

Footnotes

2 For Hegel’s analysis, on which Marx draws, see G. W. F. Hegel, Outlines of the Philosophy of Right, translated by T. M. Knox, revised by Stephen Houlgate, Oxford: Oxford University Press, 2008, First Part: “Abstract Right”, Section 1: “Property” and Section 2: “Contract.” You might also want to read the Third Part: section 2 on “Civil Society”; Subsection A on the “System of Needs”, which contains his analysis of needs, work, capital and class divisions.

3 Capital, Vol. I, p. 179.

4 All quotations from Capital, Vol. I, p. 179.

5 Ibid., p. 180.

6 Ibid., p. 187.

7 Along with Marx's own review of the history of the development of money and exchange, you might also want to look at Pierre Vilar, A History of Gold and Money, 1450–1920, New York: Verso, 1991 (originally published in Spain in 1960).

8 Originally written for the Contribution, the Introduction was set aside and replaced with a shorter Preface. It can now be found in MECW, Vol. 28, pp. 37-45.

9 On the commodification of war, see Doug Kellner, The Persian Gulf TV War, Boulder, CO: Westview Press, 1992 on how the Pentagon and the news networks packaged and sold the Gulf War to the American people, against one of the most rapidly mobilized and nationwide anti-war movements in US history. For further background, see his earlier book, Television and the Crisis of Democracy, Boulder, CO: Westview Press, 1990.

10 Small Change, Asylum Records, 1995.

11 London Calling, CBS, 1979.

12 UP!, Mercury Records, 2002.