Karl Marx and the abolition of money (1980)

"The Man with the Moneybag and his Flatterers"
Peter Bruegel the Elder (1568) 

From the April 1980 issue of the Socialist Standard

At one time the Socialist Party of Great Britain was almost alone in saying that socialism by its very nature had to be a moneyless society and that this had also been Marx's view. Our views were rejected not only, as was to be expected, by the Labour Party and the so-called Communist Party but also by the various Trotskyist sects which, right up until the late 1960s attempted to argue that it was not Marx's view that socialism had to involve the disappearance of money.

The publication, for the first time in English, in 1973 of a complete version of the pages and pages of notes Marx had scribbled down in 1857-8, known as the Grundrisse, settled this question once and for all. It completely vindicated our position, even though the other writings of Marx on money and socialism had long been there to demonstrate that he regarded the two as incompatible. The Grundrisse, we hasten to add, must not be over-rated and should be regarded as no more than unrevised private notes made by Marx, but nevertheless as notes which do allow us to follow the train of thought which led him to formulate the views expressed in his published works.

Marx published three works on economics in his life-time: The Poverty of Philosophy (1847); A Contribution to the Critique of Political Economy (1859) and the first volume of Capital (1867). In them he described money as a "social relation". By this he did not simply mean that money was a material link between isolated producers of commodities, relating them to each other, that is, socially, through the products of their labour. Money was indeed such a link but, in Marx's view. it was more than this: it was a material form taken by the relations between the producers, a sort of material reflection of the basic social relations of production.

In A Contribution to the Critique of Political Economy, where Marx does not deal with developed capitalism but only with simple commodity production, these relations were those between small-scale independent craftsmen working on their own and exchanging their products with each other. In Capital these relations are those between a class of producers operating an already socialised productive system and a minority class monopolising the means of production and appropriating for themselves, as a section only of society, the social product.

Clearly then, as a material form taken by the social relations between producers and non-producers under capitalism, money must disappear with those relations. When they are abolished, then so is money. This is a fundamental — and elementary — proposition of Marxian economics.

One of the ideas current in Marx's day for improving the lot of the working class was to substitute for metallic and interest-bearing money a paper "labour-time money". The basic idea was to express the prices of commodities in amounts of labour-time incorporated in them, so undermining the basis for any non-labour incomes. Today we would regard this as just another currency-crank idea hardly worth considering, but in Marx's day it had considerable influence in certain working class circles, even being regarded as a sort of "socialist" money. Marx dealt with this question in A Contribution to the Critique of Political Economy where he ridiculed the very idea of a "socialist money":

"Louis Blanc transforms the 'money of the society', which simply means internal, national money, into socialist money, which means nothing at all  . . . " (1971 Lawrence and Wishart edition, footnote, p. 167).

Marx also discussed this idea in the Grundrisse notebooks in connection with a book by Darimon, a now obscure follower of Proudhon. The Proudhonists' scheme was basically a proposal to improve the lot of the working class by monetary reform while retaining production for sale. After pointing out that the Proudhonists, in saying that their aim was to find a money which wouldn't cause crises by alternatively appreciating and depreciating ( which was to put things back to front anyway), were in effect trying to prevent prices rising and falling, Marx went on:

" . . . the problem would have to reduce itself to: how to overcome the rise and fall of prices. And how? By doing away with exchange value. But this problem arises: exchange corresponds to the bourgeois organization of society. Hence one last problem: to revolutionize bourgeois society economically. It would then have been self-evident from the outset that the evil of bourgeois society is not to be remedied by ‘transforming’ the banks or by founding a rational ‘money system'" (Pelican edition, p. 134).

So, Marx was in favour of abolishing prices and doing away with exchange value as the only way of preventing monetary crisis. And he also knew that the abolition of bourgeois society (capitalism) would necessarily involve the disappearance of money, prices and value. In fact in a later passage he says so in such explicit terms that no one, after reading ti, should be able to seriously contend otherwise:

"The very necessity of first transforming individual products or activities into exchange value, into money, so that they obtain and demonstrate their social power in this objective form, proves two things: (1) That individuals now produce only for society and in society; (2) that production is not directly social, is not ‘the offspring of association’, which distributes labour internally. Individuals are subsumed under social production; social production exists outside them as their fate; but social production is not subsumed under individuals, manageable by them as their common wealth. There can therefore be nothing more erroneous and absurd than to postulate the control by the united individuals of their total production, on the basis of exchange value, of money, as was done above in the case of the time-chit bank. The private exchange of all products of labour, all activities and all wealth stands in antithesis not only to a distribution based on a natural or political super-and subordination of individuals to one another . . . but also to free exchange among individuals who are associated on the basis of common appropriation and control of the means of production. " (Pelican edition, pp. 158-9.)

The existence of money, in other words, shows that production is already social but that it is not under social control. When, with the establishment of "common appropriation and control of the means of production" (socialism), production comes under the direct and conscious control of society then money quite simply disappears.

Adam Buick

Marx on Money

Marx's Capital is a treasury of literary allusions. The quotation below is from Chapter 3 "Money" (part 3) Everyman's Library (page 112)

As the circulation of commodities extends, the power of money increases, of money which is an absolutely social form of wealth, ever ready for use. Columbus, in a letter from Jamaica penned in 1503, says "Gold is a wonderful thing! Whoever owns it is lord of all he wants. With gold it is even possible to open for souls a way into paradise!" Since money does not disclose what has been transformed into it, everything, whether a commodity or not, is convertible into gold. Everything becomes saleable and purchaseable. Circulation is the great retort into which everything is thrown, and out of which everything is recovered as crystallised money. Not even the bones of the saints are able to withstand this alchemy; and still less able to withstand it are more delicate things, sacrosanct things which are outside the commercial traffic of men.

Henry III, most Christian king of France, robbed monasteries of their relics in order to turn these into money. We know what part the despoiling of the temple of Delphi by the Phocians played in Greek history. Among the ancients, the god of commodities had his dwelling in the temple. Temples were "sacred banks". The Phocians, preeminently a trading people, looked upon money as the transmuted form of all things. It was, therefore, quite in order that the virgins who, at the feast of the goddess of love, gave themselves to strangers, should offer up to the goddess the pieces of money they received.

Just as all the qualitative differences between commodities are effaced in money, so money on its side, a radical leveller, effaces all distinctions.

"Gold! Yellow, glittering, precious gold! . . .
Thus much of this will make black, white; foul, fair;
Wrong, right; base, noble; old, young; coward, valiant."

Shakespeare, Timon of Athens, Act IV, sc iii.