DOCUMENT 20 The Dialectical Development of Categories in Marx's Economic System (1929)

Isaak Il’ich Rubin

Source: I. Rubin, ‘Dialekticheskoe razvitie kategorii v ekonomicheskoi sisteme Marksa: Ispravlennaya i dopolnennaya stenogramma doklada, prochitannovo 30 marta 1929 g.

Introduction by the Editors

In the first document translated for this book, Illarion Kaufman questioned whether Marx was seriously indebted to Hegel or merely used Hegelian lan­guage to present conclusions drawn by analogy with the biological sciences. Since Marx was ‘more realistic than all of his predecessors’, Kaufman had dif­ficulty understanding why the ‘external form of his presentation’ should be so suggestive of German idealist philosophy in ‘the bad sense of the word’. The issue of methodology has reappeared throughout the documents that we have translated, but nowhere is it more central than in this essay by Isaak Rubin, which specifically addresses the ‘dialectical development of categories’ in the three volumes of Marx’s Capital. There is no question that this essay represents a theoretical triumph on Rubin’s part that far surpassed the insight of almost all of his predecessors and contemporaries.

In his commentaries on Hegel’s Science of Logic, Lenin made the famous notation that ‘It is impossible completely to understand Marx’s Capital, and especially its first chapter, without having thoroughly studied and understood the whole of Hegel’s Logic. Consequently, half a century later none of the Marxists understood Marx!!’.^[1497] Lenin added in his Philosophical Notebooks that In his Capital, Marx first analyses the simplest, most ordinary and fun­damental, most common and everyday relation of bourgeois (commod­ity) society, a relation encountered billions of times, viz., the exchange of commodities.

We quote these comments from Lenin because they also summarise Isaak Rubin’s theme in this essay, which is devoted entirely to Marx’s dialectical method. Here Rubin completed the undertaking that Lenin projected: he began with the initial ‘cell’ of bourgeois society and then followed Marx in dialectic­ally (that is, logically and historically) revealing all the fundamental contradic­tions of capitalist society. Like Lenin, Rubin understood that Marx’s Capital was conceived in his critical appropriation of Hegel’s Logic. Rubin’s work is all the more remarkable since it was published in 1929, at a time when Stalin’s suppres­sion of creative thought was already well under way in the Soviet Union - a fact reflected in Rubin’s need, at the beginning of his paper, to refute spurious criti­cisms of his earlier Essays on Marx’s Theory of Value. These opening pages only emphasise all the more the elegance of Rubin’s insight and his remarkable clar­ity of presentation. Rubin provides a methodological roadmap of Marx’s work that remains unsurpassed.

As in Hegel’s Logic, Rubin’s analysis moves within a dialectical circle of necessity - from the immediacy of a simple category (the commodity, for example) through its internal differentiation (the poles of value) to a new self­identity in a higher category (in this case money serving as universal equival­ent for the circulation of commodities) - which again proves contradictory (money as a private hoard or means of settling private credit obligations, each with the capacity to disrupt circulation) and thereby necessitates further move­ment. Rubin shows that in the entire dialectical movement of Capital, there is a sequential process of immediacy dissolving into contradiction and then return­ing in the immediacy of a more complex, but also transitory, self-identity - all of which expresses continuously changing production relations between people.

Marx discovered this logical-historical movement when he combined the analytical with the synthetic method. Through analysis he deconstructed cap­italism to arrive at the fundamental concepts of labour and the commodity; through synthesis he categorically reconstructed the contradictory (but still law-governed) unity of capitalism as a whole. This uniqueness of method was what enabled him to resolve the dilemmas left by his predecessors, particu­larly David Ricardo with his incomplete labour theory of value. Rubin points out that earlier political economy suffered from an essential deficiency:

. the classics attempted, with the help of analysis, to reduce the detach­ment and alienation of forms of wealth from one another to their internal unity - in the final analysis, to labour. But the classical school was limited by this analytical reduction and did not take the reverse synthetic route; it did not show how different forms arise from unity, gradually separating and becoming externally independent of one another; it did not show us the process of the gradual development and formation of forms, the pro­cess of the ‘genesis’ of forms.

Marx, in contrast, looked beyond the ‘appearance’ of phenomena to discover their internal connections as parts of the single process of social production. In Marx’s analysis, phenomena that have ‘become detached’ are revealed as ‘alien­ated’ production relations between people, or social forms of human relations that have, as Rubin says, ‘coalesced’ with things. The reified ‘determinations of form’, at each level of analysis, are shown confronting one another in a con­dition of contradiction and struggle, yet ultimately the entire system points beyond itself to the restoration of human community. Marx’s understanding of history begins with the patriarchal family and primitive community; it ends with the projection of a restored community that transcends class divisions but also retains the wealth of history. As Rubin writes, a history of class struggle, culminating in the conflict between those who own and those who create the means of production, prepares the ground

for a real ‘removal’ of the alienated and detached forms of social life and for a genuine revelation of the unity that lies at their basis. The more the power of ‘alienated’ labour (capital) grows over living labour, the more the conditions are created for the elimination of this alienation. It is precisely because capital develops the powerful productive forces of labour, which can no longer operate within the limits of capitalist production relations, that it also prepares its own end.

In his 1924 essay on the differences between Marx’s and Ricardo’s theory of value, Rubin had already incorporated the 1844 Manuscripts to explain the ‘dual character’ of labour and value, which, through commodity fetishism, transformed ‘things’ into the ‘mediators’ and ‘bearers’ of production relations between people. This essay completes the argument of that earlier essay by analysing still more comprehensively the way in which Marx appropriated Hegel’s dialectical methodology. In Hegel’s system, the end is implicit in the beginning: philosophy is the highest form of labour, but thought reflecting upon thought is also logic, and the Logic is where Hegel’s Encyclopaedia of the Philosophical Sciences begins.

Isaak Rubin on Marx’s Dialectical Development of Categories

1 The Subject Matter of Political Economy

My objective will not be to give either an exhaustive or even a complete state­ment of the theme I have selected. A complete elaboration of the question of the dialectical development of categories in Marx would require the joint efforts of several comrades, including both economists and philosophers. I shall limit my theme in two ways: first, I shall not be touching upon the philo­sophical foundations of the dialectical method - that is a matter for philo­sophers. We economists adopt the basic positions of the dialectical method in the general form given by Marx and Engels, and our task is to show how Marx applied these basic positions of the dialectical method to the various economic categories in Capital. The second limitation will be the following: dialectical logic involves such a wealth of forms of thought that it would be impossible to exhaust them in a single report. My task, therefore, will be to trace the manner in which Marx applies the fundamental law of dialectics - the law of the unity of opposites, together with the law of negation - to economic categories in the three volumes of Capital.

Once we speak of the dialectical development of categories, we presup­pose that the entire system of Marx's economic categories represents a single, orderly system that entails the internal unity and consistency of all its parts. In other words, we presuppose a single, orderly system of economic categories that reflects a system of production relations between people even though it is replete with the greatest contradictions.

At this point we encounter the following question: if we take the system of production relations as a whole, do we not thereby detach this system from the development of material productive forces? Are the critics, who say that we separate production relations from the productive forces, not correct? Are the critics not correct when they say that the subject matter of political eco­nomy involves, to the same extent and on an equal basis, both the produc­tion relations between people in capitalist society and the productive forces? In other words, we have to begin with the question of the subject matter of political economy. This question has provoked and continues to provoke lively debates in which two tendencies are evident: some economists maintain the long-standing Marxist doctrine, which sees political economy as the science of production relations between people in capitalist society; and other econom­ists, who do not have the courage to reject this traditional Marxist definition, wish to blunt the precision of this clear and vivid definition. They demand direct inclusion of the productive forces in the subject matter investigated by political economy.

How do matters stand on this question that currently divides Marxist eco­nomists? S[ergei] Bessonov gave the following formulation in his article: polit­ical economy investigates ‘the linkage and the contradictions between product­ive forces and production relations'.^[1500] He forgets that we can study the linkage THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 733 and contradictions between productive forces and production relations from two sides - in terms of production relations and in terms of the productive forces.

In theoretical political economy, we take our direct subject matter to be study of the production relations between people in a capitalist economy, and our objective is to reveal all of the regular patterns involved in this sphere. But the production relations do, indeed, develop in a way that depends upon changes in the productive forces; in turn, they also have a reverse effect upon development of the productive forces. Thus, to explain the development of production relations, we must continuously make reference to development of the productive forces. Secondly, before beginning a study of the whole system of production relations in a capitalist economy, we must clarify just which development on the part of the productive forces has brought about the existing system of production relations. But that is not all. Throughout our entire study we must look to the sphere of development of the material productive forces for the causes of change in economic forms and in the production relations between people. In the movement from one form to another, in the transition from value to capital, and in the explanation of why capital divides into industrial, commercial and money capital - we must look to the sphere of material productive forces for the causes that evoke changes in the production relations between people. We cannot always specify these causes that issue from the sphere of material production, and Marx did not always show us precisely which changes in the productive forces brought forth one or another change in production relations. But it is our duty, in principle, to look to the sphere of development of the material productive forces for the causes of changes in production relations.

At the same time, we must also study the reverse influence of production relations upon the productive forces. However, this by no means implies that we take the productive forces to be the direct object of our study - and any­one who is familiar with the elementary principles of classification in the sci­ences will understand this without any difficulty. The various sciences study different aspects of a single reality. The various social sciences study different aspects of the life of society. Given the inseparable connection and interaction between the different aspects of social life, every science, which studies one aspect of life in society, must, in research intended to explain its own object, always include phenomena from the adjacent sphere; that is, phenomena that

in the 4th Russian edition of his Essays on Marx’s Theory of Value. See I.I. Rubin, Ocherkl po teorilstolmostlMarksa (Moscow: Gosudarstvennoe Izdatel’stvo, 1929), pp. 304-63]. are the direct object of study for other related sciences. For example, the sci­ence that studies law cannot understand the development of law without ref­erence to development of the economy, and particularly to development of the material productive forces. Otherwise, such a science of law would not be a Marxist science. Nevertheless, the science of law does not take the eco­nomy to be the subject matter of its investigation. To explain the production relations between people and how they change, political economy must refer to development of the material productive forces; but, given this fact, we do not take our objective in political economy to be study of all the regular pat­terns occurring in the sphere of development of the material productive forces. We invoke them in our investigation only insofar as we must do so in order to explain the laws involved in changes of the production relations between people. And even in this case, while we refer to material from the sphere of the productive forces, we do not so much become involved in a special ana­lysis and investigation of this material ourselves as simply make use of what is given and established in the adjacent sciences. Thus we have an interest in see­ing the science of social technology become sufficiently developed to provide us with adequate material concerning development of the productive forces within capitalism so that we may use this material to explain the development of production relations between people. And this also means that, for those of us in political economy, the direct object of investigation is the production relations between people. The presupposition of our research is the material productive forces.

We frequently hear this sort of reproach: once you assign the role of presup­position to the productive forces, you attribute to them some kind of modest place in the development of society and deny their role as motive force for the whole of social development. This objection is based upon a crude mis­understanding. We do not counterpose the word ‘presupposition’ to the term ‘motive force’. Every Marxist is obliged to recognise that the motive force for the whole of social development is precisely development of the material pro­ductive forces. But this motive force for the whole of social development is not what we study in theoretical political economy. We resort continuously to development of the productive forces in order to explain the production rela­tions between people, and this means that the material productive forces are the presupposition of our research. The word ‘presupposition’ does not stand opposed to the term ‘motive force’; it marks a distinction from the ‘object’ of the investigation. Every science has its own direct object of investigation. All related phenomena, which we invoke in a given science insofar as they are necessary in order to explain the direct object of our research, are referred to in science as a presupposition of the investigation. Anyone who does not under-

stand this distinction does not understand either the ABC of the classification of sciences or the AB c of the division of labour between the different sciences.

Let us take an example to illustrate the idea. Everyone understands that there is an inseparable connection between the technical composition of cap­ital and growth of the organic composition of capital. At the same time, though, everyone who studies Capital knows that Marx took for the direct subject mat­ter of his research the growth of the organic composition of capital, that is, growth of the value relations between the parts of capital insofar as these value relations reflect the changing proportion between dead means of production and living labour; that is, insofar as they reflect changes occurring in the sphere of technique, in the sphere of the material productive forces. Does this mean that Marx made growth of the technical composition of capital the direct sub­ject matter of his investigation? Anyone who has read Capital knows that Marx did not do that. Marx gave us the basic formula of growth of the technical com­position of capital in order to explain growth of the organic composition of capital, and then he investigates in detail the influence of growth of the organic composition of capital on the concentration of production, on expansion of the reserve army [of labour], and so forth. In a word, he explores the production relations between people, as expressed in an entire series of economic phe­nomena; and meanwhile, growth of the technical composition of capital, for Marx, is the basis or presupposition of his research, not the direct object. If Marx had wanted to study directly the growth of the technical composition of capital, he would have had to collect an enormous volume of detail, portraying the increase of dead means of production relative to living labour. He would have had to provide a great volume of material describing the development and condition of technique in capitalist society. That is not what Marx did, because that sort of special research into changes in the sphere of technique between dead means of production and living labour - research that is completely necessary and can cast much light upon the development of economic phe­nomena - cannot enter directly into the economic system that Marx provides.

Bessonov objects to the existence of two sciences, one of which studies pro­ductive forces while the other deals with the production relations of capitalist society. Apparently he thinks that the existence of two sciences will create a rupture between the productive forces and the production relations. But it would surely be most naive to think that, in order to preserve the connection between the two phenomena, one must directly study them within a single science. Would the link between the productive forces and the relations of pro­duction really be guaranteed by looking at them in terms of a single science? Such a joining together into a single science of different sides of economic life, which differ in terms of their character and the laws of their development, does not in the slightest degree ensure us against a rupture between these two sides; and, contrariwise, you can study these two sides in terms of two different sci­ences, while also studying each in advance as part of a single economic process, as a part that presupposes its other side and is inextricably connected with it. Only in this way can you ensure against a rupture, and not at all by joining together what cannot be joined, by doing violence to theoretical political eco­nomy, or by aiming to tear apart the entire structure of the economic system that Marx outlined in Capital.

Bessonov says that I am ‘dreaming up' new sciences: a science of social tech­nique and a science of the production relations between people. I could claim, with much greater justification, that Bessonov wants to invent a single science that studies both the production relations between people and the product­ive forces. You see, we Marxists always pride ourselves on the fact that, as soon as we begin to discuss production or the economy, we establish a precise dis­tinction between the relation of man to nature and the relation of people to people. We have always considered this to be a superiority of Marxist com­pared to bourgeois science. We have always laughed at bourgeois scholars, who spend several volumes discussing production without taking the trouble to clarify whether the issue is the material-technical side of production or the production relations between people. As I will further demonstrate, all Marx­ists, including Lenin, have drawn a clear distinction, as soon as they began to speak about production, between the material-technical process of pro­duction and the production relations between people. Marx always said that political economy studies the production relations between people while the material-technical process of production relates to the sphere of technology. Marx emphasises the need to work out a special science, a ‘critical history of technology' that would show ‘the material basis of every particular organisa­tion of society'.^[1501] That is why, in my Essays, I also pointed out that the material productive forces are studied by a special science of social technique, a science that must undergo extensive development.^[1502]

Of course, the material productive forces are essentially a social phenom­enon. They change in the course of historical development and bring about changes in the production relations between people. This means that the material productive forces are also, essentially, an historical and social phe­nomenon, just as the production relations between people are. But the point is that we are not obliged to include all social phenomena in a single science. The fact that the productive forces are a social phenomenon in no way requires us to include them directly in the subject matter of our investigation. Those economists who want to concoct a single new science of the economy are for­getting that every science is a product of long historical development, and that we Marxists are also obliged to approach science itself from an historical point of view. We cannot conceive our task in such manner that we can now sit at a table and begin anew the classification of sciences. Such a view would be non- historical and non-Marxist.

What is it that we are disputing? Is it a question as to which object we should choose for a science that we will invent and create in the future, or are we arguing over the issue of what, in fact, is the object of political economy, which has developed in the course of two centuries and found its completion in Marx’s system? It is precisely the latter that we are presently disputing. Polit­ical economy, which received orderly and finished form in Marx’s Capital, is the science of the production relations between people. We can even explain why, by force of historical necessity, it became the science of production relations between people. How did political economy emerge? It began with the dis­cussions and disputes of seventeenth-century mercantilists concerning wages, profit and rent; that is, it began with questions relating to the distribution of aggregate value between the different social classes. It reflected the struggle of social classes for their position within the given system of production rela­tions between people. Political economy originated as the result of a fierce struggle between different classes and groups. It developed as the science of wages, profit and rent; in short, as the science of the system of values, or of the production relations between people. The various bourgeois schools struggled to strengthen their positions within the limits of the given capitalist system of production relations between people. Marx raised the question to an unat­tained height when he spoke of change of the production relations between people as such, of destruction of the entire system of production relations in capitalist economy and their replacement by a new system, by a socialist economy. It was precisely this grandiose task, encountered by Marx as the ideo­logist of the working class, that convinced Marx to define political economy as the science of production relations between people.

And what was the substance of the harsh critique that Marx directed against bourgeois economics? It consisted of the following: bourgeois economists argued that the basic phenomena of capitalism - profit, wages, interest and rent - necessarily result from the very nature of the production process and cannot be altered as the social form of the economy changes. Marx said to the bourgeois economists: all of these phenomena, which you attribute to the production process as such, are a result of the capitalist form of the produc­tion process; all of these phenomena have an historical and transitory char­acter that is connected with the given social system of production relations between people. Consequently - said Marx - when development of the pro­ductive forces creates the necessity for demolition of the old system of produc­tion relations between people, all economic laws will acquire new form and all economic phenomena will be different. This was the sharpest critical weapon with which Marx struggled against vulgar political economy. This sharp critical weapon was the doctrine that all economic phenomena express the production relations between people. Anyone who wishes to throw away this definition of political economy, as the science of production relations between people, is light-headedly relinquishing the sharpest weapon with the help of which Marxist science has achieved enormous successes. Our critics must take into account that they are rejecting the definition that all Marxists share, without any exception, and that has frequently been repeated in the works of Marx, Engels, Plekhanov, Lenin, Hilferding, R[osa] Luxemburg and others.

Plekhanov uses the following expressions to characterise the revolutionary upheaval in science produced by Marx: ‘The economic categories themselves express nothing but mutual relations between people, or of entire classes of society, within the social process of production. Economic science only adop­ted the correct viewpoint when it understood this and became engaged in an investigation of these mutual relations that are hidden behind the ima­ginary qualities of things and behind the mysterious properties of economic categories’ (Vol. vι, p. 170). Marx never ceased to repeat, at every step, that all economic categories are essentially an expression of the production relations between people. Value is an expression of the production relations between people, money is an expression of the production relations between people, and capital is an expression of the production relations between people. Marx produced a revolution in science, particularly in the teaching on capital, thanks to the fact that he saw in capital an expression of the production relations between people. And in The Poverty of Philosophy Marx says that ‘economic categories are only the theoretical expressions, the abstractions of the social relations of production’.^{[1503] [1504] Engels repeats the same idea: ‘Political economy is not concerned with things but with relations between people, and in the final analysis between classes; these relations, however, are always bound to things and appear as things’ (PodZnamenem Marksizma, 1923, Nos. 2-3, p. 56).8 This THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 739 very same definition was repeated more than once by Lenin in his most diverse works and in various ways of expression. He wrote that the subject matter of political economy ‘is not by any means “the production of material values”, as is often claimed - that is the subject of technology - but the social relations of people in production’.[1505] Lenin was so fond of this traditional Marxist distinction between the two sides of the production process that he repeated it in prac­tically all of his works. He mentioned it in his book on Sismondi,[1506] [1507] [1508] in ‘What are the “Friends of the People”’,n and in his review of the book by [Alexander] Bogdanov^2 everywhere you find the idea emphasised that political economy investigates the social relations between people. We demand from our critics a clear and direct answer - Do they agree with this long-standing Marxist defin­ition of the subject matter of political economy or do they not?}

...If they agree that the subject matter of political economy is the social rela­tions between people, and if they are simply emphasising that when studying the production relations between people we must constantly refer to develop­ment of the productive forces, as the motive force that brings about change of the production relations between people - then a basis can be found for a mutual convergence of viewpoints concerning the subject matter of political economy. But if they persist in rejecting the established Marxist definition of political economy as the science of production relations between people, and if they say - as Bessonov writes today in his theses - that both the production relations and the productive forces are ‘equally’ the subject matter investigated by political economy, then the consequence is their rejection of the definition that all Marxists have shared without exception. They are thereby introducing the greatest confusion into the definition of political economy’s subject mat­ter. They are obscuring a question already resolved thanks to Marx’s ingenious efforts. They are erasing a fundamental distinction between Marxist and bour­geois political economy.

I have no wish to burden you with quotations, but I can show you by ref­erence to the example of [Gustav] Cassel, one of the potentates of thought in modern bourgeois political economy, that all of his efforts are aimed precisely at showing that the fundamental economic phenomena, particularly profit and interest, necessarily result from the material features of the production pro­cess. It is precisely in order to struggle against this basic direction of bourgeois thought that we must preserve the sharp weapon of criticism given to us by Marx, which consists of the fact that we regard all economic phenomena as the expression of production relations between people. Moreover, I would even say that those comrades who so love the productive forces actually wish to confine all study of the productive forces to those few chapters and separate observa­tions for which we can find room within the sphere of our science, the sphere of theoretical political economy. They are ignoring the fact that, in order to study the laws of development of the productive forces in capitalism, we have to col­lect extensive materials and subject them to thorough analysis and research, that we require a special science that is now partially being created. Essentially speaking, those comrades who demand inclusion of the productive forces in the subject matter of political economy can only inhibit the development of a science of the productive forces, including development of a science especially devoted to study of the productive forces of a capitalist economy.

In order to prevent a rupture between the productive forces and production relations, we certainly have no need to join both elements together within a single science; but we must define production relations in such manner as to connect them indissolubly with the productive forces, and at each stage of our investigation we must make reference to development of the material product­ive forces. In order to avoid any misunderstanding, I repeat that every Marxist must eagerly support the explanation of all changes of production relations in terms of changes of the material productive forces. If you were able to prove that the function of means of payment developed from the function of means of circulation, and did so directly under the influence of the material process of production, that would be a great achievement for Marxist political economy. But we have not yet done so. For the present, we still cannot always specify the causes, for example, of the appearance a given function of money - nor can we, at each stage of the investigation, specify exactly all of the causes of the change of economic forms - that are included in the development of the mater­ial productive forces. In general terms, we can and must do so, but without obscuring the differences between various sides of the production process, and by remaining entirely on the ground of the established Marxist definition of political economy as the science of production relations between people.

Many comrades say: why did Marx pay so much attention in Capital to ques­tions of technology, to questions of the development of technique? But just read Marx, comrades, not by snatching individual pages but rather by tak­ing him in the context of his ideas as a whole. Consider an example. Marx writes about the development of machines. In the lengthy chapter 15,^[1509] which THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 741 includes more than 115 pages, Marx devotes the first 12 pages to the devel­opment of machines in order to provide a basis for his fUrther research; and following this first point, concerning the development of machines, you see another nine sections that study the influence of the development of machines on the production relations between people. The second section speaks of value, of the transfer of the machine’s value to the products; the third, of the effect of machines upon the workers; the fourth, of factories; the fifth, of the struggle between workers and machines; and the subsequent sections speak of the theory of compensation, of the repulsion and attraction of workers, of the effect of machines upon handicrafts, and finally, of factory legislation. Marx derives a whole series of economic phenomena from the fact of the devel­opment of machines. Moreover, if you read through these 12 pages that are devoted to the development of machines, you will see that Marx begins with the introduction of machines as a means for producing surplus value, and he ends once more with the study of machines as a specific mode of increas­ing surplus value. Sixty years have passed since Capital was written. During that time the history of technique, and particularly the history of machines, has seen great accomplishments. Today’s economist, unlike Marx, has no need to acquire information on the history of machines from scattered individual observations. And so I ask: is it possible to include the tens and hundreds of works on the history of technique within the theoretical system given to us by Marx? It is enough just to pose concretely the question of the actual classific­ation of the sciences, which has emerged as a result of their two-hundred year history; it is enough just to look, with eyes wide open, at the actual division of labour that has been established between the sciences - and then you will see that any mention of including the productive forces and relations of pro­duction within the sphere of political economy, on an equal footing, is simply empty talk with no possibility of disclosing any real content. In the question of the subject matter of political economy, we are obliged to stick with the old position of Marx; we are obliged to preserve the definition of political economy as the science of production relations between people. We must continually emphasise that the production relations are only one side of the production process, and that their entire development is conditioned by movement of the material productive forces. In order to explain changes in the production rela­tions between people, we must look for a corresponding cause in the material process of production. But the direct subject matter of our research in theoret­ical political economy remains the production relations between people.

2 The Dialectical Unity of the System of Production Relations

I now turn to the second point of my report - to the question of the dia­lectical unity of the system of production relations between people. We have come to the conclusion that production relations change in a way that depends upon development of the material productive forces. But now we encounter the following question: if production relations change under the influence of changes in the material productive forces, is the unity of the whole sys­tem of production relations, which characterises a given economic formation, still preserved? It is true that certain critics deny the very existence of this single system of production relations between people. Bessonov writes in his theses: ‘Political economy does not study a “system” of production relations, because a “system” is something frozen and completed, but rather “the rela­tions of production in a given, historically defined society, in their inception, development, and decline”'. (The closing words are taken from the works of Lenin).^{[1510] [1511] In a word, Bessonov does not recognise the system of production relations as the subject matter of political economy, but rather their develop­ment. But how can a ‘system' be counterposed to its ‘development'? Why can we not study a system of relations of production in their inception, develop­ment and decline? Suppose we take seriously Bessonov's thesis that political economy does not study a system of production relations. In that case, what do we do with Marx's position, which says that we are investigating an ‘eco­nomic structure'? The point is that Marx's greatest service lies precisely in the fact that he found different economic structures, different social formations. In his early work on ‘What the “Friends of the People” Are', Lenin points out frequently that this was Marx's greatest service. From a multitude of diverse and tangled social relations, Marx knew how to discern an economic struc­ture as the unity of production relations of the given society. Can it be that an economic structure is not a system? Is an economic formation really not a system? In Lenin's ‘What the “Friends of the People” Are', you find the fol­lowing sentence: Marx takes ‘one of the social-economic formations - the sys­tem of commodity production'?5 ‘The system of commodity production' and ‘the system of capitalist economy' - evidently Bessonov believes we must not speak in such terms because a system, in his view, means something that is frozen.}

Marx always considered that the production relations represent a certain single system whose parts are interconnected. In The Poverty of Philosophy Marx writes: ‘The production relations of every society form a whole’.^{[1512] [1513] [1514] [1515] What does this mean? It means that they constitute a system. True, Marx does not say that this system is frozen and unchanging, as Bessonov writes, for there are indeed systems - and we may mention to him in secret that this includes every system in the world - that emerge, develop and perish. At the end of his Critique of Political Economy, Marx writes about [Thomas] Tooke. He says that Tooke studied the various functions of money instead of looking at one or another function one-sidedly, yet Marx says that he did so ‘without paying any attention to the organic relation of these aspects either with one another or with the system of economic categories as a whole’?7 As you see, Marx speaks of a ‘system of economic categories’. How is it possible to deny that the production relations represent a single system?}

In his article on the Critique, Engels thought it necessary to emphasise that ‘Hardly any attempt has been made since Hegel’s death to set forth any branch of science in its specific inner coherence’?⁸ He regarded Marx’s Critique as an attempt to discern this internal coherence of all the elements of a given science, i.e. to consider, as a whole, the given system of economic categories and the economic relations between people that they express.

This is all the more clearly evident in Lenin’s writings on Hegel’s Logic, which have recently been published. There Lenin gives the following exact formula­tion: ‘As the simple form of value, the individual act of exchange of one given commodity for another already includes in an underdeveloped form all the main contradictions of capitalism’?⁹ If you do not have a system of economic categories, how can this form of value include within itself, in underdeveloped form, the main contradictions of capitalism?

Thus the production relations of a capitalist economy and its corresponding economic categories constitute a single, determinate system of interconnected parts, in which one form arises historically from another form and operates on the basis of that other form. But at the same time, as we have just mentioned, production relations change in a way dependent upon the material productive forces. How do we resolve this apparent contradiction? On the one hand, all production relations are interconnected and form a certain system; but on the other hand, production relations change in a way dependent upon a change of the material productive forces.

The system of categories of political economy represents a developing and increasingly complex system of different production relations that are expressed in different social forms - in the social form of value, capital, etc. Does the social form of capital arise from the social form of value or from development of the material productive forces? I am deliberately posing the question in such a ridiculous form as ‘either-or’ in order to demonstrate for you the impossibility of framing the question in this non-dialectical form. We know how this social form of capital emerged. We know that a simple commod­ity economy previously existed, although it was not yet adequately developed, and that it represented a unity of productive forces and their social forms. In particular, there existed in the simple commodity economy, although not yet adequately developed, the social form of value. We know that, precisely due to pressure from development of material productive forces, the produc­tion relations between simple commodity producers grew over into production relations of the capitalist type. We know that this growing over was not merely quantitative but was also qualitative; it was an entire historical upheaval, a leap. Bessonov accuses me of making no allowance for a leap between differ­ent social formations. I wrote explicitly in my Essays (p. 102) that ‘An enormous historical revolution (described by Marx in the chapter on primitive capitalist accumulation) was necessary for the transformation of money into capital’.²⁰ One social form arises from another simpler social form under the pressure of change on the part of the material productive forces. But it arises not in the empty vacuum of space, or directly as a passive reflex of the existing condition of the productive forces, nor in a manner disconnected from other social forms and other production relations between people.

Thus, in response to the question posed above, it will be correct to answer as follows: within the limits of a given system of economy, each complex form of production relations between people arises from a simpler form of production relations under pressure from a change in the productive forces. Translating this formulation from the language of production relations into the language of economic categories, or forms, we come to this conclusion: within the limits of the given economic system, each economic category or form arises from the development of a previous, simpler economic category or form under pressure from development of the productive forces.

Now you can see the total lack of any grounds for the charge hurled at me by certain critics. ‘To deduce form from form - that is Rubin’s closed circle of schol­astic thought. To deduce a socialform from content extraneous to it - that is the real course of Marx’s thought (S. Bessonov’s review in Izvestiya TsiK, 30 Novem­ber 1928). This is precisely the false, non-dialectical posing of an ‘either-or’ question that I mentioned above. A complex social form arises either from a simpler social form or from content extraneous to it - that is how the critic poses the question. A complex social form arises from a simpler social form under pressure from a determinate development of content, that is, from the material productive forces - that is our response, which is in full agreement with Marx. The critic attributes to us the idea of an immaculate conception of one social form from another, without any intervention from the profane matter of the productive forces. But this accusation is totally groundless. The critic forgets that behind every social form are concealed the production rela­tions of many millions of people, which recur day in and day out and represent enormous diversity. This is the constant sea of motion in which the process of changing production relations, under pressure from development of the pro­ductive forces, endlessly occurs and new types of production relations between people appear. When you think in the language of categories or social forms, it appears strange that a new and more complex form is born from a preceding one that is simpler, since you regard a social form as something static and con­gealed. But if you recall that behind each social form are concealed the daily recurring relations of a multitude of people, then you will already find here the dynamic element, the presence of enormous diversity that makes continuous development possible - under the influence, to be sure, of development of the productive forces.

20

Rubin 1990, p. 91.

We must beware of two extremes. The first extreme can be encapsulated as follows. We take a determinate social form (value, for instance) and by way of a dialectical development of the given concept we try to deduce from it a whole series of other social forms (money, capital, etc.), without making any reference in explaining this development to the process of movement on the part of the material productive forces. This would mean replacing the dialectic of matter, or of real phenomena, with a dialectic of concepts. But I have always objected to precisely this [way of thinking]. In Essays (third edition, p. 102) I wrote that ‘In Marx’s work, one concept is transformed into another, not in terms of the power of immanent logical development, but through the presence of an entire series of accompanying social-economic conditions’.²¹ It is not for nothing that certain critics, who do incline towards a dialectic of concepts, have accused me of replacing the ‘abstract’ method with a ‘concrete-descriptive’ one.

21

Ibid.

All of this demonstrates the complete lack of any grounds for the accus­ation, levelled against me by S. Bessonov, of an inclination towards ‘the self­development of concepts'. But we must not, out of legitimate fear of the self­development of concepts, fall into the opposite extreme and sever the dialect­ical link between various social forms. If you are going to regard every economic form as the direct passive reflex of a change in the material process of pro­duction, then the entire scheme of social development appears incorrectly as follows. A given condition of the material production process exists, together with a corresponding production relation between people, or a social form. Then the material process of production changed, it assumed a new appear­ance; and we, having forgotten our previous social form - which already existed and was in effect - regard the new social form as a passive reflex of the new condition of the productive forces, which arises in empty space apart from any connection with the already existing social forms. This means severing the dialectical connection between all social forms. Your new and more complex social form arose not directly from the productive forces, but from the previ­ous, simpler social form. A new production relation between people emerged from the former production relations under pressure from development of the material productive forces. Only with this understanding can you preserve the internal unity and dialectical coherence of Marx's entire economic theory, in which all social forms (value, money, capital, etc.) are inextricably intercon­nected both in their historical emergence and in their simultaneous opera­tion.

If Bessonov followed his thinking through to the end, he would have this sort of picture. A definite condition of the productive forces exists; and corres­ponding to it are definite production relations. The condition of the productive forces changes (within the limits of the given economic formation), and then new production relations correspond to it, having nothing in common with the preceding ones. As with, say, two-storied houses, on the lower floor are the productive forces, on the upper are the production relations, and along­side the given house stands another house with no connection to the first one. Bessonov is willing to allow passage ways on the lower floors, but the upper levels must not communicate in any way. The more complex form of produc­tion relations between people has nothing in common with the preceding, simpler form of production relations, but is a direct passive reflex of the pro­ductive forces. In short, this is a genuine system of English, or if you do not like that appellation, Scottish cottages, which stand side by side and do not communicate. And I propose to my critics the following question: given your understanding of the dependence of production relations on the productive forces, how can you conceive the dialectical unity of all economic categories?

How can you explain Lenin’s saying that all of the contradictions of capitalism are included, in undeveloped form, in the simple form of value? How can you preserve the unity of the entire system of production relations, and the unity of the entire system of economic categories, which for Marx make up the con­tent of the three volumes of Capital? In his theses Bessonov quite consistently denies the existence of a ‘system’ of production relations between people. One might expect that he will be even more consistent and will deny the dialectical unity of the entire system of economic categories that constitute the content of the three volumes of Marx’s Capital.

Knowing that on the question of the subject matter of political economy we take our stand on the orthodox Marxist point of view, our critics make an about-turn and hurl another accusation at us. They charge us with study­ing not the production relations between people, but only the reified form of their manifestation. They say that, for us, the production relations between people disappear behind the reified form of manifestation. Therefore, having previously charged that we study the production relations but not the product­ive forces, they now accuse us of examining not the production relations but rather the reified form of their appearance. Our critics then draw the following conclusion: once, in their opinion, the type of production relations between people is occluded in my Essays by the reified form of manifestation, all dif­ference is then erased between social formations of the economy, including the difference between simple commodity production, a capitalist economy and the Soviet economy. The distinction between types of production rela­tions between people is wiped out because they have the same external form of expression, for instance, in the form of value and money. Bessonov bases this accusation on the following three arguments.

The first argument:

The categories of a capitalist economy are regarded by him (by Rubin) simply as a complication of the categories of commodity economy. It is redundant to point out how little such a viewpoint resembles the Marxist conception. Capitalist society, according to Marx, is not a mere ‘complic­ation’ of commodity economy; it is a type of society that is different in principle, although it still has the same commodity basis, and it appears as the result of a cataclysm, a leap, never as the result of a simple ‘complic­ation’. There is no place for this ‘leap’, for this cataclysm, in Rubin’s ‘theory’, which regards all societies, wherein relations between people are envel­oped in reification, as merely being more or less complex but essentially no different one from the other (Review by Bessonov in Izvestiya TsiK, 30 November 1928).

The second argument: Rubin discards all questions having to do with the distribution of means of production between different classes and groups of the population, and from this point of view he once again obscures and erases the difference between the simple commodity economy, the capitalist economy and the Soviet economy.

The third argument: By assigning exaggerated importance to the reified form of manifestation - to value and money - Rubin thereby effaces the difference of production relations between people.

Even without examining these arguments, one can say in advance that on this particular point the critics attribute ideas to me that directly contradict everything that follows from the way the question is formulated in the Essays. Indeed, the whole formulation in the Essays is intended to take examination of a given system of production relations between people, a given social type of economy, and a given economic structure as the starting point. I explicitly claim that all of the economic phenomena investigated by our science are connected precisely with the given capitalist system of economy and can have no place in any other economic system. And after I draw such a sharp distinction between different systems of economy, I am accused of finding identical laws for dif­ferent social forms, for different economic structures, for simple commodity economy, capitalist economy and the Soviet economy.

Let us analyse these arguments in detail. The first: Rubin regards capital­ism as merely a complication of simple commodity economy and not a leap. In my Essays (p. 42) I wrote: ‘Marx's economic system analyses a series of pro­duction relations of increasingly complex types. These production relations are expressed in a series of socialforms of increasing complexity - these being the social forms acquired by things'.^{[1516] [1517] But on the very same page 42 I wrote a foot­note that Bessonov either did not read or does not include: ‘We have in mind various forms or types of production relations among people in a capitalist soci­ety, and not various types of production relations that characterise different types of social formations'?3 You can see how the question is formulated in the Essays. I take a given type of economy - a capitalist economy - and within the limits of that given system I study the relation of different and gradually more complex social forms, or production relations, in both their historical emer­gence and their simultaneous operation. I emphasise that the issue concerns the increasing complexity of types of production relations within the limits of a capitalist economy; yet here the critic attributes the idea to me that a simple complication, without any qualitative leap, represents the transition from one system of production relations to another.}

22

23

The second accusation: Rubin is interested in the reified form of social phe­nomena, in the external form of their manifestation, and this external form of manifestation occludes for him the various types of production relations between people. To make such a statement is to distort the central idea of the Essays. Indeed, their central idea is the following: behind each social form of things there is concealed a definite type of production relations between people. If it happens that behind one and the same form of external appearance there are concealed different types of production relations between people, we must not confuse these different types of production relations but rather dif­ferentiate between them and separate them out. I wrote that ‘We classify eco­nomic phenomena into groups and build concepts on the basis of the identity of the production relations that the phenomena express, and not on the basis of the coincidence of their material expressions’.^[1518] Is it permissible to confuse the price form in a simple commodity economy with that in a capitalist economy and in the Soviet economy? Can the price form be confused when behind it are concealed completely different production relations between people, based upon a different distribution of means of production between different classes? I shall not even speak of the fact that even the external forms of manifesta­tion are not identical here. Even an external, superficial observer knows that the price established by planning organs, or by co-operative organs - even in terms of external appearances - is fundamentally different from a price that is established on the basis of the law of value and the spontaneous activity of the market. Even the external form of manifestation of these economic phe­nomena is strikingly different. But aside from that, even if you do not some­times discern a difference between external forms of manifestation, you are still obliged to look above all at the type of production relations concealed behind this external form of appearances. Only by completely distorting the fundamental idea - the foundation of the Essays - can one say that, for me, the external form of appearance conceals and obscures the difference of produc­tion relations between people. To the contrary, the methodological rule, which I repeat on every page of the Essays, is this: search everywhere for the specificity of production relations between people, and reveal the difference between them even when they are concealed behind identical external forms of mani­festation. Always regard the social form of things merely as the expression of production relations between people. In political economy, we investigate the social form of things (value, money, capital, profit and wages) because the pro­duction relations in a capitalist economy are reified; however, in studying each of these forms, we must constantly refer to the production relations between people that they conceal, and we must consider the role of given forms as an expression of the relations between people. That is the fundamental idea that I endeavoured to emphasise in my Essays, and [my purpose was] certainly not to direct your attention away from production relations to the social forms of things. I sought to reveal the role of the social forms of things as expressions of the production relations between people and as the regulator of the social process of production.

Bessonov’s third argument: Rubin obscures the difference between various forms of economy because he has absolutely no interest in the question of the distribution of means of production between various classes of the population. To substantiate this assertion Bessonov cites one - as he calls it - ‘astounding’ comment in my Essays. Let us consider just who is amazed by this astound­ing comment. This shocking remark comes in a footnote on page 40 of the Essays.^[1519]1 write in the note that we must distinguish two problems. One prob­lem concerns the influence upon the character of production relations of the distribution of means of production between classes of the population. This problem exists for every society, just as much for a feudal one as for a capital­ist one. The other problem concerns the ‘coalescence’ of production relations with the elements of material production; this is the problem of commodity fetishism in the narrow sense of the word. This problem exists only in capital­ist society. Bessonov draws from this the following conclusion: since I write in the footnote that here, when we are investigating commodity fetishism, we are interested precisely in the latter problem, this means that Rubin completely disassociates himself from such a cardinal problem as the dependence of pro­duction relations upon the condition and distribution of the productive forces. And once that happens, Rubin mixes up the distribution of means of produc­tion between different classes in a simple commodity economy, a capitalist economy and the Soviet economy. For him [Rubin], this question of the dis­tribution of means of production is non-existent.

The argument that I have cited demonstrates very clearly Bessonov’s method of waging a polemic. Every one of us agrees that in order to understand a foot­note it does no harm to read the text as well. A footnote customarily refers to some text; and in the text (pp. 39-40) I write that the law of dependence of pro­duction relations upon the distribution of means of production between the various classes is ‘a general sociological law that holds for all social formations’, because even ‘in feudal society production relations between people are estab­lished on the basis of the distribution of things among them and for things, but not through things’.^{[1520] [1521] This means that there exists for feudal society the problem of the dependence of production relations upon the distribution of means of production between various classes, but not the problem of commod­ity fetishism. ‘The specific nature of the commodity-capitalist economy resides in the fact that production relations among people are not established only for things, but through things'?7 What is the consequence? The consequence is that for a commodity-capitalist economy, two problems exist: one problem is the dependence of production relations upon the distribution of means of production; the other problem, which is specifically new, is the problem of commodity fetishism. In my footnote on the same page 40 I explicitly wrote that the first problem exists ‘in the economic sphere of various social forma­tions'. The problem of commodity fetishism holds only for capitalist economy. You can see, therefore, just how critics have contrived to distort my thinking. I said that the problem of the dependence of production relations upon distribu­tion of the means of production holds for all formations, including capitalism; I write that for capitalism there exists not only this problem of the depend­ence of production relations upon distribution of the means of production, but also the problem of commodity fetishism. Yet Bessonov writes: for Rubin there exists only the problem of commodity fetishism, and for him the problem of the dependence of production relations upon the distribution of means of pro­duction does not exist. Where I write ‘not only, but also’, the critics inscribe the word ‘only - a slight alteration but one that significantly alters the text. You can see that this method of polemicising is rather monotonous. The only variation is that one time the text is read without reading the footnote; the next time the footnote is read without reading the text.}

Thus, the first device of the critics is the following: where the author writes ‘not only, but also’, the critics write ‘only’. And the second device is this: where the author has included no such word, the critics write in ‘only’. On page 139 of his article Bessonov writes: Rubin ‘says that only “exchange inseparably includes within itself the social-economic and material-objective moments”’.

Take page 26 of the Essays, to which Bessonov refers, and you will see that a new paragraph begins with the word ‘exchange’.^[1522] The word ‘only’ is added by Bessonov. Nowhere do I claim that ‘only’ exchange includes within itself the material-technical and social-economic moments. To the contrary, in tens of places I write that the process of production also has two sides: the material- technical and the social-economic. In the present case, evidently, Bessonov has no inkling of the fact that when I write that exchange contains within itself the social-economic and material moments, I am repeating a phrase that Marx used on tens of occasions. Marx says that exchange includes the ‘exchange of things’ and the ‘change of forms’.

The third device of the polemic is to enclose words in quotation marks and then attribute them to me when I used no such words. On that same page 139 Bessonov says: ‘Rubin, in a hundred different ways, explains to us that technology... is something belonging to the “natural relations of things”’. I knew that such words as the ‘natural relations of things’ were not mine, and after a search I discovered in Bessonov’s article a long quotation from a book by [Alfred] Ammon, in which it was obvious that these words belong to Ammon but were attributed to me. These examples are sufficient to characterise the polemical devices used by our critics.

In concluding this part of my report, I address to my critics the following two fundamental questions. On the first topic, the subject matter of political economy, my question is this: do they recognise the traditional Marxist defini­tion of political economy’s subject matter; do they acknowledge that political economy examines the production relations between people; or do they lack the courage to repudiate this definition explicitly? With regard to the second topic, I ask them: if they deny the existence of a ‘system’ of production relations between people; if they deny that some social forms arise from other social forms under pressure from development of the productive forces; and if they sever the connection between various social forms and economic categories - then how is the dialectical unity of Marx’s entire system preserved?

Disclaiming the traditional definition of the subject matter of political eco­nomy, and repudiating the dialectical unity of Marx’s entire system - such is the truly ‘orthodox’ doctrine that Bessonov and other critics are proposing to us.

I now turn to the question of the dialectical development of categories in Marx’s Capital. The first thing that will be of interest to us is how Marx applies the law of the unity of opposites in connection with the law of negation. In other words, not only do I not deny leaps in the transition from one system of production relations to another, but I consider that even within a given system of production relations, within the system of capitalism - as Marx shows us when moving from one category to another - each successive category is not merely a further development of the preceding one but also its negation. Here we have a qualitative change in production relations within a given system and within a given economic structure. From Marx’s point of view, a given group of phenomena, by virtue of their internal contradictions, take on a new form, a more developed and complex form in opposition to the first form. Gradually becoming more complex, the phenomena take on a new form that is opposed to the first and original form. This idea constitutes the central position of Marx’s dialectical method. Marx shows that within each group of phenomena, which constitute a certain unity, differentiation, polarisation, separation of different qualities and the appearance of opposing elements necessarily occur due to internal contradictions. In other words, there is a necessary appearance of opposition within a group of phenomena that constitute a known unity. This is the first aspect of the law of the unity of opposites.

This position also leads to the reverse position: if contradiction necessarily appears within every group of phenomena that constitute a certain unity, then we can say, conversely, that a group of phenomena, which are opposed to and distinct from one another, form a certain unity within whose limits they are antitheses. Such is the dual character of the law of the unity of opposites: the appearance of contradictions within a group of phenomena that constitute a unity, and the maintenance of unity within a group of phenomena that consti­tute opposition. These two sides of the law are emphasised by Marx in the first volume of Capital when he writes: ‘To say that these mutually independent and antithetical processes form an internal unity is to say also that their internal unity moves forward through external antitheses’.^[1523] If processes that are appar­ently independent of each other form a unity, then from the other perspective this is a divided unity, a unity with internal contradictions that move within this unity and propel the movement of the entire process. If, from this point of view, you recall the method that Marx used in political economy, you will see that this method displays the characteristics of his dialectical method in gen­eral. We know that under all the reified categories Marx saw the production relations between people. Viewed externally, the whole economic life of capit­alist society appears as the movement of things and changes in their character. We see the movement of prices, commodities, the value of money, the level of wages, etc. All of these phenomena are reified; from the outside they appear to be separate and opposed phenomena, dispersed alongside one another in the space of social life (understanding space, of course, in the allegorical sense). We see that these phenomena act upon one another, but they act from without, as if they are alien to one another, as if they are independent and separated, and that is why we cannot always reveal the true cause of their movement. For instance, we see that a change in the prices of commodities that are means of subsistence for workers changes the level of wages. The value of products has an influence upon the wage level. But, in capitalist society, we also see the reverse phenomenon - the level of wages, at least in part, causes a change in the prices of commodities. When we observe the external side of this series of reified phe­nomena, which are dispersed alongside one another, we may come to the most contradictory and mistaken conclusions. Adam Smith, for example, when he observes this external side of phenomena, arrives at two opposing conclusions concerning the inter-relation between value and incomes. Smith says that the value of products breaks down into incomes - wages, profit and rent - mean­ing that value is something primary and that the change of value determines the movement of incomes. But Smith also falls into the opposing view, saying that a change in the magnitude of incomes (wages, profit and rent) changes the magnitude of the value of the product. Until now this debate over what is primary, value or income - that is, whether value must be taken as primary and then be divided into incomes, or whether incomes must be taken as primary and then be used to constitute value - to this day the debate has yet to be resolved in bourgeois political economy. Marx followed Ricardo and took the view that value is primary. But modern bourgeois political economy occasion­ally attempts to take the magnitude of incomes as the starting point.^[1524]

I use this example merely to demonstrate that, in viewing phenomena from the outside, we are frequently confused when explaining their mutual connec­tions. We notice that one phenomenon acts upon the other, while the second also acts upon the first, but we do not know where the motivating cause of the entire system of given phenomena originates. Marx succeeded in replacing this study of phenomena from the outside with an investigation of the internal laws concealed behind them; and he did so precisely because behind the external form he revealed the movement of production relations between people.

The specificity of the dialectical method is already expressed in this revolu­tion accomplished by Marx, i.e. in the replacement of reified categories by the production relations between people. What the dialectical method demands of us is that we replace examination of congealed things, isolated from one another, with a study of fluid and dynamic processes that are connected with one another. This is the first methodological directive that Engels frequently reiterated. And Marx’s method in political economy actually fulfils this dir­ective, transforming all the congealed forms of things, differentiated from one another, dispersed and immobile as it were, into eternally changing, fluid and fully dynamic processes - into the change of production relations between people - a process that is evoked, in turn, by change of the material productive forces.

Moreover, Marx shows us how determinate production relations between people, in particular the relations between commodity producers, become more complex due to internal contradictions and give birth to new forms of relations between people that are opposed to the previous ones and differenti­ated from them. Marx shows us the gradually increasing complexity of produc­tion relations between people, the genesis of new and qualitatively different forms, and the appearance of antithetical forms within a group of phenomena that previously constituted a unity. Marx thereby discloses to us a system of production relations, becoming gradually more complex and assuming a new form that is antithetical to the former one and, at the same time, constituting a unity with it, a unity within which they interact. He likewise makes full use in political economy of the law of negation, i.e. the law of the appearance of new forms that are antithetical to the previous ones, and at the same time he shows the unity of all these forms, revealing to us the unity of opposites. In this way, Marx realises the fundamental demand of the dialectical method, the demand of the law of the unity of opposites, the demand that we recognise opposition within phenomena and at the same time apprehend their unity. I shall now attempt to show briefly how the law of the unity of opposites is deployed by Marx throughout the three volumes of Capital.

3 Division, of the Commodity into Commodity and Money

Let us begin with the question of the division of the commodity into commod­ity and money, or the doctrine of the different forms of value. This teaching on the break-up of the commodity into commodity and money is, at the same time, a teaching on the dual character of the commodity. According to Marx, the dual character of the commodity is an expression of the dual character of labour as concrete and abstract. The dual character of labour, in turn, points to the contradiction concealed in the very structure of commodity economy,

which, on the one hand, is a sum of labour activities that complement one another and constitute a certain material unity, while on the other hand it has a spontaneous character and rests upon the dispersal of means of pro­duction between separate individuals who produce products as commodities and sell these commodities to each other. This contradiction in the structure of commodity economy is manifested in the dual character of labour. The dual character of labour is reflected in the dual character of the commodity. The dual character of the commodity finds expression in the appearance of the com­modity and money.

Let us think further about Marx's teaching on the dual character of the com­modity. This involves one of the most important and, at the same time, most difficult points of Marx's theory. Critics of Marx have often reproached him for his teaching on the dual theory of the commodity, claiming that he engages in metaphysical discourses that have no basis in real economic phenomena. In order to demonstrate that Marx was by no means involved here in a purely logical splitting of concepts, having no correspondence to real phenomena, I suggest that you first consider this question analytically, i.e. beginning not with the contradictory character of labour and the commodity but rather taking the reverse approach, beginning with the more complex and already developed forms that occur on the surface of economic life.

What is it that we see on the surface of economic life? We see the com­modity and money, opposed to each other in the space of social life, repla­cing each other and moving about from one place to another. In the Critique Marx says that if you regard the phenomenon of exchange from without, it seems that what you have before you is a whole series of activities with no inter-connections. You see how a given rouble today buys item A and therefore changes places with item A. Subsequently, the very same rouble travels onward and takes the place of commodity B, then of c, etc. Here, says Marx, the process ‘loses its distinct form'.³¹ We do not know the social process because it is con­cealed behind this movement of money and commodities. However, Marx says, let us consider the process differently; more precisely, remember that the com­modity and money, which at first sight appear to be opposed to each other in space, in reality represent two sequential phases in the movement of one and the same commodity. Instead of saying that linen stands opposed to a certain quantity of money, and instead of examining these two things that are chan­ging places, focus upon the change of social form that is occurring here. Then you will see that, essentially speaking, when linen takes the place of money its conversion into a certain sum of money represents nothing but movement of the linen itself, and thus also of the linen’s value, through two opposing phases. Conversion of the commodity into money is nothing but the movement of the commodity through two opposing phases.

Thus you see here the first example of Marx’s method, which consists of the following: he regards two things, opposed to each other in space, as the expression of two phases of one and the same process, as the passage of one and the same commodity through two phases. The necessary result is that value must also pass through these two phases, at first being a value that is fastened to a restricted use-value, and then taking on another form of value, the money form.

Once Marx has reduced the commodity and money to two sequential phases in the movement of one and the same commodity, the question then arises: Why is it that the commodity must invariably pass through these two phases, through the commodity phase and the money phase? Marx’s answer is: this occurs because the commodity has two antithetical aspects that must find their expression in movement and, for that reason, cannot be revealed otherwise than by the passage of the commodity through the two opposing phases of the process. In other words, it is precisely because Marx saw, in the exchange of the commodity for money, two phases in the movement of one and the same commodity, that he came to the idea that the commodity itself is necessar­ily distinguished by an internal contradiction. In turn, Marx traced this dual and contradictory character of the commodity to the dual and contradictory character of the labour that creates the commodity. Consider this one typical remark that Marx makes in the first edition of Volume I of Capital, [a remark] that takes us directly to the very essence of the teaching on the dual character of labour:

Since [private labour] is not directly social labour, the social form [of labour] is first of all a form distinct from the natural forms of real use­ful labour, a form foreign to them and abstract, and secondly, all the different kinds of private labour get their social character only antithetic­ally (gegensatzlich), by all being equated to one exclusive kind of private labour...³²

What is Marx saying in this sentence about the dual character of labour? He is saying that since labour in its natural form is not directly social labour, the social form of this labour is an abstract form that is alien to it and contradicts the natural form of the given labour. There emerges a contradiction between the two forms of labour: the natural form of labour and the social form of labour. The social character of labour is separate and alienated from the labour itself, being opposed to it as the abstract form of labour. To put it differently, the labour of each commodity producer, in order to reveal its social character, must invariably assume this form of abstract generality - or the labour of the commodity producer must have a dual form - in order to reveal its social character. It must have the natural form, and simultaneously it must be equated with labour that is abstract and alien to it. This means that the labour of every commodity producer must pass through two antithetical phases of movement. From the natural form in which it now finds itself, it must pass over into the abstract form, into a form that is antithetical to this natural form. This does not mean that in its first phase of movement the labour is solely natural. On its own, the very fact that this labour must invariably pass over into the following phase imposes upon it from the very outset a dual character. Thus labour, in each of its phases of movement, has a dual character: in the first phase, labour is directly natural labour, yet ideally, or potentially, it is labour of an opposite type, abstract labour. Only in the second phase is this social character of labour finally disclosed and realised.

The commodity, which is the product of this same labour, must pass through the same two phases for the full disclosure of its social character. Here we come to the fundamental doctrine concerning the contradictory character of the commodity, namely, that the commodity contains within itself a contradiction that must be resolved by movement, by the passage of the commodity through the two antithetical phases. What does this contradiction involve? It involves the same contradiction as in the case of labour, and Marx has much to say about it in the Critique. On the one hand, the commodity is [a value in terms of labour],^[1525] a property that makes it possible for its owner to exchange it for any other commodity. It has an acknowledged social character. On the other hand, this same commodity is a use-value, a natural product in which value is fixed as a certain social property. So long as this property is naturally fixed in the given commodity, so long as value is fixed in the linen, this linen represents, as Marx says, a product of individual labour whose social character is notyet recognised and certified by society. As Marx comments in one place: ‘on the one hand, commodities must enter the exchange process as reified universal labour-

THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 759 time, on the other hand, the labour-time of individuals becomes materialised universal labour-time only as the result of the exchange process’.^[1526] The labour that creates the commodity must, on the one hand, be social labour even before the process of exchange, while on the other hand it is only through the process of exchange that its social character is revealed. And this means that the commodity, in order to reveal its social character, must invariably pass from the form in which its social character is still constrained, due to the limited use­value in which it is fixed, to the form of a directly social product, that is, to the form of such product as may be exchanged for any other product, [to a form] that represents the direct embodiment of social labour and gives its possessor the ability to acquire the same amount of social labour in the form of any other product. We therefore find ourselves at the next stage of our discussion. We can say that commodities exist. Every commodity is a unity of value and use-value. And in every commodity there is a contradiction: on the one hand, it has the social character of value, but on the other hand its social property, being fixed in a limited use-value, can still neither be revealed directly nor give the owner of the commodity the possibility of having at his disposal a certain quantity of social labour in the form of any other product in natural form.

Following this teaching on the dual character of the commodity, or the doctrine of value in general, Marx turns to his teaching on the simple form of value, or the doctrine of exchange-value. What is the essence of this doctrine of exchange-value? It consists of the following. If we take a group of commodities, which in terms of their character all resemble one another - since each of them represents a unity of value and use-value - if we take this group of commodities that are similar in terms of their social character but internally contradictory, then the moment these commodities enter into exchange for one another a differentiation of functions between them must necessarily appear, and the different characters of these commodities must be revealed. Here we come to Marx’s teaching on the simple form of value, or the teaching that concerns their differentiation and the appearance of the polar-opposite functions of both commodities, with the resulting need for the appearance of two forms of value - the relative form of value and the equivalent form of value. In other words, what is involved is the break-up of the whole world of commodities into two groups, into the group of simple commodities and the universal equivalent - money. In this doctrine we have a strikingly clear example of the application of the law of the unity of opposites, according to which a group of items with a singular character splits, due to the contradiction that inheres within them, into two opposing parts. The social form of the commodity, which was previously identical but at the same time internally contradictory, divides into two opposing forms, into the form of the simple commodity and money. In the Critique of Political Economy, Marx does not show us the development of this process. In the Critique of Political Economy Marx shows us the dual character of labour; this dual character of labour corresponds to the dual character of the commodity, which finds expression in the division of the commodity into the commodity and money. In the Critique, this division of the commodity into the commodity and money is, so to speak, the correlate of the dual character of the commodity and the dual character of the labour creating the commodity. However, Marx does not show us how the commodity, as a unity of use-value and value, divides into these two opposing forms. He only completed this work in Capital with his doctrine of the forms of value, which is one of the most important parts of Marx's teaching.

How does Marx show us that two commodities, which enter into exchange for one another, must invariably perform different functions in this exchange? We can say that the teaching on the simple form of value is a doctrine of the appearance of initial differentiation in the relations of commodity producers, of the appearance of initial contradiction within a group of commodities that hitherto had a perfectly identical social character but were internally contra­dictory. And that is precisely why we have here the appearance of the initial differentiation of production relations between people and the social forms of things (within the limits of a commodity economy), and why the simple form of value is significant as the cell-form, which in Lenin's words already has con­cealed within itself all the contradictions of the capitalist economy.^[1527]

Why must a differentiation of functions invariably begin between commod­ity A and commodity B, which exchange for one another? In his article on the ‘Critique of Political Economy' Engels explains briefly: once we have a relation of two commodities, we also have two sides of this relationship. Once we have two sides of a relationship, they differ from one another and are opposed to one another. If we apply this general guidance to the case at hand, then we must see Marx's doctrine of the simple commodity form approximately as follows. Two commodities, A and B, enter into exchange for one another in conditions where the character of both commodities is perfectly identical but each commodity is internally contradictory. In what sense is each commodity internally contra­dictory? In the sense that, on the one hand, it reveals its social character, its character as value, only through equalisation with the other product. Product A reveals its social character through equalisation with product B. But product B, at the same time, reveals its social character only through the same exchange with product A. In this act of exchange, each product must perform two com­pletely antithetical roles. Each commodity must disclose its social character through exchange for the other product, and at the same time it must serve as the material for disclosing the other product’s social character. The impossib­ility of a single commodity fulfilling these two functions at one and the same time is self-evident. As Marx says, ‘the form of direct and universal exchangeab­ility is an antagonistic (gegensatzliche) form, as inseparable from its object, the form of non-direct exchangeability, as the positivity of one pole of a magnet is from the negativity of the other pole’.^[1528] The form of universal direct exchange­ability, the directly social form characterising one product, excludes such dir­ectly exchangeable form for any other product that enters into exchange with it.

Indeed, let us suppose that product B has the direct social form, i.e. is the product of recognised social labour and can be exchanged for the product of any other social labour. But if commodity B has the significance of being a product of directly social labour and thus can take the place of any other product (for instance, product a), by the same token the other product, in this same act, cannot play such a role of a directly social product that has the form of direct universal exchangeability. In the given act of exchange, the two commodities perform different functions: commodity A appears as a product of private labour, commodity B as the product of directly social labour. But the point is that each commodity is contradictory in character, being the product of both private and social labour. Accordingly, the two commodities not only perform different functions in the given phase of exchange, but each of them must also, in another phase of exchange, fulfil a function opposite to the one being fulfilled by it in the given phase of exchange. And this also means that the dual character of the commodity cannot be expressed in any other way than by the fact that each commodity, in the exchange process, must pass through two phases. The first phase consists of the fact that commodity A, by means of exchange for the natural form of B, the other commodity, discloses its social character and acquires the form of direct universal exchangeability. It acquires this form only as a result of the given act of exchange. In the second phase, this commodity already enters into the exchange process as the directly social commodity, freed from its connection with the restricted natural form of the given product. In other words, no single commodity can express its social character in any other way than as means of exchange for the natural form of the other product. The result, therefore, is that the value of product A is equal to the use-value of product B in its natural form. Here we have the differentiation of functions, of the roles of the two commodities that enter into exchange. The one commodity expresses its value through the natural form of the other commodity; and the other commodity, in its natural form, serves as the expression of the first commodity’s value. The appearance of this differentiation in the hitherto uniform world of commodities was developed by Marx in his doctrine of the simple form of value.

It would be a very protracted process to retrace all of the subtle dialectical transitions with whose help Marx shows us how two commodities, which are fully equal to each other, begin in the act of exchange to play an unequal, dissimilar and differentiated role. It is very interesting to trace how Marx comes to the idea, through the equality of the two commodities A and B, of the need for the polarisation of functions, the need for them to fulfil two contradictory functions. In the beginning, the term that Marx uses is the value relation of the two commodities, i.e. the relation in which they both fulfil the same role. Marx then goes one step further and says: if you have the value relation of two commodities, A and B, then from this ‘value relation’ (Wertverhaltniss) of the two commodities we can also find the ‘expression of value’ (Wertausdruck) for one of these commodities. We can express the value of commodity A in commodity B. As Marx says, in the value relation of the two commodities is included the expression of value of one of these commodities in the other commodity, or ‘Wertausdruck’ is included in ‘Wertverhaltniss’. If you read the first chapter of Marx’s Capital you will see that Marx draws a distinction between the ‘value relation’ of the two commodities and the ‘expression of value’ of the one commodity in the other commodity.^[1529]

What does this distinction involve? When you speak of the ‘value relation’ A to value B, what you mean is that the value of commodity A equals the value of commodity B, i.e. value figures on both sides of your equation. You have discovered the equivalence of two values, but you have not found the value of either product. All you have found is that the value of A equals the value of B, but you have not determined whether this value is 1,10 or 100. If you wish to know the value even of one of these commodities, you have no alternative but to take the value of one commodity as given and express the value of the other in the use-value of the first. The value of commodity A equals product B in its natural form. Now value will figure on the left side of your equation, and on the right side - an item in natural form, an item that you take as such - in its own skin, as Marx said - to be the embodiment of value. Compare these two expressions: 1) the value of A equals the value of B; 2) the value of A equals B. At first glance these two expressions do not appear to be different from one other, yet there is a fundamental difference between them. In the first formula you have value on both sides of the equation, yet value is not expressed; and in the second formula, the value of one product is expressed in the use-value of the other. The two commodities play completely different roles. This difference of roles consists of the fact that commodity A has value only insofar as it is equivalent to commodity B, i.e. commodity A represents value not directly but rather indirectly, by way commodity B, i.e. it appears indirectly as only as use­value. Commodity B, in its natural form, appears directly as the embodiment of value. ‘The internal opposition (Gegensatz) between use-value and value, hidden within the commodity, is therefore represented on the surface by an external opposition, i.e., by a relation between the two commodities...'.^[1530]

In this formula we already see an initial differentiation, although still weak, between the two commodities, an emergence of two different and antithetical forms of value. Commodity A has the form of value apart from its own natural form, and commodity B has value in its own natural form. Generalising, we may say that we have reached two forms of value: one form of value apart from the natural form of the product, and another form of value directly fused with the natural form of the product. We have found two forms of value directly opposed to each other: the relative and the equivalent^[1531]

So long as we take only the two given commodities, A and B, these commodit­ies possess their forms of value (relative and equivalent) only within their given relation to each other. It is only when we correlate commodity A with com­modity B that the first acquires the relative and the other the equivalent form of value. The active role here belongs to A; it is A that expresses its value in commodity B. It is only because the producer of commodity A correlates his product with commodity B that the latter, within the limits of the given relation between the two commodity producers, fulfils the special function of equival­ent. In the given relation of two commodities (for example, 20 yards of linen = 1 coat), value is focused and polarised on one side, in the coat; yet the issue is precisely the value of the linen itself, which has found expression in the nat­ural form of the coat. Here ‘the linen's own existence as value comes into view or receives an independent expression'.^{[1532] [1533]}

We must turn our attention to the following terminology of Marx. Marx says that the value of the linen, because it is expressed in the coat, ‘receives an independent expression'. In the first edition of Capital f Marx wrote that the commodity ‘receives a value form distinct, separate and independent from its naturalform’. ‘Exchange value is [therefore] in the first place the independent form of appearance of the value of the commodity’^^[1534] The value of the linen has received a separate form apart the item in which it finds itself, the form of another natural item that opposes it. Value has received an ‘alienated' and separate form as exchange-value. A process of ‘alienation' and isolation has occurred. The value of the linen, as it were, has separated from the linen itself, or as Marx often says, the internal contradiction, concealed within the commodity itself, has taken the form of an external contradiction.

When we are speaking of the exchange of two commodities, a polarisation of functions occurs and these commodities play a different role. But this differ­ence, as Marx explains in the first edition of Capital (p. 29), is merely ‘passing' and ‘formal'. There is only a formal differentiation of the functions of A and B, which only prevails within the limits of their given relationship with each other. If B is taken out of its relationship with A, it will not play the role of equi­valent. In a word, the separation of money from the sphere of all commodities has yet to occur, and equivalent B is the same kind of commodity as all the rest. You can reverse the given equation, and then B will no longer play the role of equivalent in relation to A. Thus, the given relationship between these two commodities has a passing and transitory character. Their difference of func­tions has not yet become fixed. In this simple form of value, therefore, ‘it is still difficult to keep hold of the polar antagonism' in the functions of the two com­modities^{[1535] [1536] True, this simple form of value already contains within itself ‘this antithesis, but it does not fix it';44 i.e. it does not fasten a specific function to one commodity or the other. As Marx says in the first edition of Capital (p. 23), the development still occurs ‘uniformly' for both of the commodities, A and B, which are found on the two sides of the equation. This ‘uniformity' of devel­opment of the two parts of the equation already disappears in the developed form of value, because product A reveals its social character only through its equalisation with an entire series of other products playing the role of equival­ents. The difference and antithesis between the two poles of the expression of value acquires here a more profound character. Finally, when the social divi­sion of labour and [commodity] exchange expand, all commodities begin to be compared with one commodity - gold - and the function of universal equi­valent coalesces with the natural form of the latter as the antithesis between the two sides of the expression of value further ‘develops and hardens’.[1537] In the simple form of value, where commodity B fulfils the function of equivalent only within its given relationship with another commodity, the illusion arises that it has ‘the equivalent form independently of this relation’?[1538] [1539] In the money form this illusion ‘becomes stronger’ and finally ‘ossifies’ (verkn∂chert).47 ‘The form of universal equivalent coalesces with the natural form of a certain type of commodity, or crystallises in the money form’[1540] [1541] This process of the ossification or crystallisation of social forms is traced by Marx through all three volumes of Capital. In the present case, this term means the following: whereas previously commodity B assumed the property of equivalent only within its given rela­tionship with commodity A, and whereas until now a thing acquired a social property only in the presence of a given relationship between two commodity producers, in the money form the universal equivalent possesses the property of being directly the embodiment of value and of abstract labour, independ­ently of the concrete relationship into which it enters with some other par­ticular commodity. Gold is the universal equivalent not only at the moment when linen is equated with it but even apart from this act. This social function becomes fastened to it as a thing with definite natural properties.}

Whereas previously commodity B acquired the property of equivalent because commodity A exchanged for it, the matter is different when applied to gold. Every commodity must be directly exchangeable into gold because gold has the property of universal equivalent. ‘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 lhem'.4 The inner contradiction of the commodity, requiring its necessary movement through the two sequential and antithetical phases of the exchange process, has taken the form of the external contradiction between the commodity and money, arranged, as it were, side by side in space. Every commodity now finds the form of money readily available and detached from the commodity itself. In Marx's words, the commodity finds the ready form of money, a fixed and crys­tallised money form; it finds the objective stability of a universal equivalent in an objectively fixed form. We saw previously that all commodities, through their own activity, create the social property of the commodity that separates out as the universal equivalent. But now that this separation is completed, it appears to us that it is the money that sets the commodities in motion. Whereas in reality ‘the money form is merely the reflection thrown upon a single com­modity by the relations between all other commodities',^{[1542] [1543] it appears that the commodities, for their own part, are passive and are set in motion by this most detached commodity, by money. In this connection Marx uses a formulation to which he often returns later. He says that gold essentially became money only thanks to the movement of all the commodities that exchange for it, yet the ‘movement through which this process has been mediated vanishes in its own result, leaving no trace behind'.51 The entire complex social process of the detachment of money from the commodity world has taken place behind the backs of commodity producers; it has vanished in its own result, and gold in itself, in its natural form, is money. We do not see the entire social process that has created this result, and enormous force of analysis is required in order to reconstruct the whole process whereby a complex form detaches from a homo­geneous setting, a process involving the emergence of antithetical forms when previously they were uniform, i.e. a process subject to the action of the law of negation and the law of the unity of opposites.}

In his teaching on the forms of value, Marx has traced the process of gradual intensification of the contradiction between the two poles of the value expres­sion, ending with the bifurcation of the commodity into the simple commodity and money. In accordance with the law of the unity of opposites, however, Marx shows us not merely the necessary emergence of opposition in a previously homogeneous setting, but also the necessary preservation of unity between the phenomena that have been released from each other. Parallel with the intensi­fying antithesis between the two commodities participating in exchange, there is also intensification of the unity that binds them together - and this happens precisely because each of them takes on an increasingly one-sided character, which demands to be supplemented in the form of another commodity that is distinguished by the opposite properties. In the simple form of value, the difference between products A and B had a ‘passing' and ‘formal' character.

The unity that connects them was also transitory and contingent: product A can be just as easily exchanged for any other product - c, D, E etc. - as for the given product B. In the money form of value, when product B (gold) has finally become the universal equivalent, product A must be directly exchanged for B; it is correlated with B and has the money form in advance, even before the act of exchange. Along with the intensifying contradiction between A and B, the unity that binds them together also intensifies. What does this entail? In the first place, it entails the unity of their genesis, of their historical origin from a group of homogeneous commodities that subsequently divided into two groups. This unity is manifest, secondly, in the fact that every commodity must invariably pass through the two stages, through the two phases (of simple com­modity and money), and only by passing through both of these phases does it reveal its social character. In the third place, this unity appears in the fact that the relative form of value is inconceivable without an equivalent, for the very concept of relative form presupposes a relation to some other commodity that is the material for the given commodity’s expression of value; and con­versely, the equivalent form is impossible without the relative form, or in a word, without the interdependence of these antithetical forms. Finally, we have not only the interdependence but also the interpenetration of these forms, since from the moment when the break-up of the commodity world into the simple commodity and money has occurred, every commodity must invariably pass through the two phases and be converted into money. This means that every commodity, without yet being really converted into money, still has the poten­tial or the ideal form of money, which fulfils the role of measure of value. The commodity includes within itself the potential form of money, and money is essentially the ‘metamorphosed commodity’, that is, it bears the imprint of the previous exchange of the given commodity for a given sum of money. Thus we have a genetic unity of the origin of these two antithetical forms, an internal bond between them as two sequential phases in the movement of one and the same commodity, a mutual conditioning because neither of these forms can be conceived without the other, and finally, their interpenetration since each of them is not simply a single form but also potentially the other form. Therefore, in the doctrine of the bifurcation of the commodity into simple commodity and money, in this doctrine of their intensifying antithesis and at the same time their mutually complementary character, i.e. their unity, we have a strik­ing illustration of the law of the unity of opposites.

This teaching from Marx concerning the genesis of money must, in the first place, explain the historical process of the emergence of money from the com­modity (or more accurately, from products that find themselves in the process of conversion into commodities); and secondly, it must disclose the laws of the simultaneous and mutually conditioned movement of commodities and money in the developed capitalist economy. Correspondingly, the law of the unity of opposites, in the given case, must also demonstrate to us first the unity of historical roots and the process of gradual separation of the two anti­thetical forms of the commodity; and secondly, it must reveal the unity and difference between the movement of commodities and money in the capitalist economy. Marx's critics have asserted that in his teaching on the contradict­ory character of the commodity and its bifurcation into the simple commodity and money, Marx resorted to the ‘self-development of concepts'. This is untrue. Marx's teaching reflects a real social process that, on the one hand, took place in a definite historical period (different for different peoples) and, on the other hand, has left its result in the capitalist economy by way of two opposing and interacting spheres: commodity circulation and money circulation. The separ­ating out of money was the result of the increasingly frequent repetition of the movement of commodities in exchange; this movement of commodities reflec­ted a determinate character of the production relations between members of society as commodity producers; finally, the spread of this particular type of production relations was brought about by the requirements of the material process of production.We can observe the connection between these phenom­ena approximately as follows.

Development of the social division of labour, both within a single com­munity and between foreign communities, strengthened the demand for a social ‘exchange of things', for acquiring the products of foreign labour. Arising on the basis of an already existing difference between spheres of production, exchange reinforced and further developed this difference. Within the com­munity, separate parts and spheres of production, which previously had a dir­ectly social character, ‘attain such a degree of independence that the sole bond still connecting the various kinds of work is the exchange of products as com- modities'.^[1544] ‘Independence' (Verselbstandigung) of different types of labour, done by different individuals, develops. Within the community - partly under the pressure of exchange with foreign (fremde) communities - there arises a ‘relation of mutual estrangement' (Fremdheit) between its individual mem­bers who turn into commodity producers. The labour of separate individu­als becomes ‘independent', while at the same time the material connection strengthens between individuals and different types of labour. This funda­mental contradiction of commodity economy increasingly deepens, on the one hand, as the social division of labour develops, and on the other hand, THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 769 due to the disorganisation and spontaneity of the economy. The activities and production relations of commodity producers become increasingly differenti­ated, ‘segregated’ and ‘alienated’, while at the same time a parallel ‘reification’ and ‘coalescence’ with things occurs. The differentiation of activities and of relations between commodity producers; the ‘objectification’ (Versachlichung) of production relations, their ‘coalescence’ with things, and their ‘ossification’ (Verknocherung) as the social forms of things; the gradually growing ‘independ­ence’ (Verselbstandigung) and ‘alienation’ (Entfremdung) of production rela­tions and the corresponding social forms of things; the genesis from simple forms to the more complex, which are antithetical to the former and at the same time constitute a unity with them - all of these are simply different aspects of the grandiose process of the development of a society of commodity producers that is becoming ever more complex. This process is the simultan­eous realisation of the sociological law of the social division of labour and of the differentiation of functions between the individual members and groups of society; of the economic law of the reification of production relations and their coalescence with things; and of the general dialectical law of the unity of opposites. With these three dimensions, let us now briefly take a closer look at the process we have been describing - of the bifurcation of the commodity into the simple commodity and money.

Marx shows that the bifurcation of the commodity is a reflection of the bifurcation of the functions of commodity producers.

The commodity-owners entered the sphere of circulation merely as guardians of commodities. Within this sphere they confront one another in the antithetical (gegensatzliche) roles of buyer and seller, one person­ifying a sugar-loaf, the other gold. Just as the sugar-loaf becomes gold, so the seller becomes a buyer. These distinctive social characters are, there­fore, by no means due to human individuality as such, but to the exchange relations of persons who produce their goods in the specific form of com­modities.^[1545]

In this passage Marx excellently conveys the link between the differentiation of activities and of the social characters of people, between the personification of things and the growing antithesis (and unity) between the activities of people and the social forms of things.

The process of the commodity’s bifurcation means not only the original differentiation of the functions of commodity producers but also the original reification of production relations in things. The doctrine concerning the gen­esis of money is a teaching on the ‘coalescence’ of the production relations between people with the natural form of things. In this teaching, Marx showed us how social functions, which were initially acquired by things only within given determinate production relations between people, become congealed in the thing alongside of the given production relations. Marx emphasised many times the specificity of the equivalent, which consists of the fact that although it initially acquires its social form only within the given relations between com­modities A and B, it appears to us that this social form belongs to it by nature. And when this social form, due to the development of exchange and of the activities of all commodity producers, coalesces with gold, we come directly to a social form, naturally inherent in the given product, which is independent of all those production relations in which it figures at any given moment. We reach a social form that is frozen, ossified, crystallised and has coalesced with a thing.

On the one hand, therefore, you have here a striking illustration of Marx’s doctrine concerning the reification of production relations, their coalescence with the natural form of things, and the acquisition by the thing of social functions that it possesses independently of the concrete production rela­tions within which it figures at a given moment. On the other hand, we also have in this doctrine concerning the forms of value a clear example of the gradual intensification of the antithesis between commodities and money that expresses the two sides of the commodity’s character, the gradual strength­ening of this contradiction that was originally only temporary and transitory. Marx’s teaching concerning the break-up of the commodity into two oppos­ing forms is a striking illustration of the dialectical laws of negation and of the unity of opposites.

In the process of the commodity’s bifurcation, the differentiation of func­tions between people, the reification of production relations and the develop­ment of contradiction within unity still have an elementary character. Indeed, ‘the opposition (Gegensatz) between buyer and seller’ still has a ‘superficial and formal’ character,^[1546] since the person who at one given moment comes forth in the role of seller appears sometime later in the role of buyer. It is true that, corresponding to the difference between commodity and money, there are the different economic functions of commodity producers: ‘Two antithetical trans- THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 771 mutations of the commodity (c-M and M-c) are accomplished through two antithetical social processes in which the commodity owner takes part, and are reflected in the antithetical economic characteristics of the two processes’.^[1547] But ‘the owner of the commodity successively changes his role from seller to buyer. Being a seller and being a buyer are therefore not fixed roles, but con­stantly attach themselves to different persons in the course of the circulation of commodities'.-^{[1548] [1549] [1550] The different economic functions have not yet ‘crystallised’ and permanently fastened themselves to specific persons.}

Just as the differentiation of functions between buyer and seller still has a preliminary and undeveloped character, so the process of the reification of production relations between people in the commodity and money also has an elementary character by comparison with more complex forms (capital, interest, etc.).

Finally, the development of contradiction within unity still has an element­ary character in the process of the bifurcation of the commodity. But since ‘the contradiction (Gegensatz) of commodity and money is the abstract and gen­eral form of all contradictions inherent in the bourgeois mode of labour’,’⁷ we shall many times encounter the further development and growing complexity of this contradiction in what follows.

4 The Functions of Money’⁸

Marx regards the formation of value as a process in which the production rela­tions between people, as commodity producers, find their expression in the form of value - a property inherent, as it were, in the product of labour. Marx regards the formation of money as a process in which the relation between commodities as values is expressed in the form of their relation to one par­ticular commodity that plays the role of universal equivalent, or money. Marx expressed the inseparable link between these two processes in the following words:

The fact that commodity owners treat one another’s labour as universal social labour appears in the form of their treating their own commodities as exchange-values; and the interrelation of commodities as exchange­values in the exchange process appears as their universal relation to a par­ticular commodity as the adequate expression of their exchange-value; this in turn appears as the specific relation of this particular commodity to all other commodities and hence as the distinctive, as it were naturally evolved, social character of a thing.^[1551]

These words from Marx clearly demonstrate the process of gradual fetishisa- tion, or the reification of production relations between people. The produc­tion relations between people take on the form of the social properties of things. As production relations between people become more complex, the social forms of things likewise become more complex. The process of fetishisa- tion of social relations between people involves, therefore, many stages. In the case that we are considering, the movement of production relations between people assumes the form of the movement of commodities, and the move­ment of commodities is reflected in the movement of prices. Value, being the expression of production relations between people, in turn represents the basis upon which money emerges as a more complex and fetishised social form of things.

The task of a dialectical examination consists of demonstrating the neces­sary emergence of the more complex forms of things from simpler ones. The investigator must reconstruct a picture of the development of production rela­tions between people and of the corresponding social properties of things, moving from the simpler forms to the more complex. It is precisely this syn­thetic path of investigation, moving from the production relations between people to the commodity, and from the commodity to money, that Marx out­lines in the excerpt quoted above.

Obviously, the synthetic path of investigation, from simpler forms to the more complex, does not exclude an analytical approach but rather presupposes it. Every investigation begins with analysis of a complex form for the purpose of discerning the simpler forms from which it has developed. With the help of analysis, we detect behind the movement of money the movement of com­modities, and we examine the latter as the expression of production relations between people, which are determined, in turn, by the requirements of the material-technical process of production or by the ‘exchange of things':

The different determinations of form that money assumes in the process of circulation are essentially only crystallisations of the change of forms on the part of commodities themselves, which in turn are only the object­ive expressions of changing social relations in which commodity-owners conduct their exchange of things.^[1552]

Here Marx analytically sketches the path of investigation from more complex forms to the simpler ones: from money to the commodity, and from the com­modity to the production relations between people.

In both types of study, the analytic and the synthetic, money appears before us as the reified expression of production relations between people. We cannot, however, reduce money directly to people’s production relations (nor can we deduce it from the latter). Money is the product of a very complex process of the reification of production relations between people - a process that we must examine in terms of all the intermediate links. The mediating link between people’s production relations and the money category is the category of the commodity, or value. Our investigation, therefore, divides into two stages. In the first stage, the theory of value, we study the process of the materialisation of people’s production relations in the value of commodities. In the second stage, the theory of money, we must demonstrate how the movement of commodities is expressed in the movement of money. The link between the commodity and money represents the principal theme of Marx’s theory of money. And in this regard, being true to his fundamental methodological principle, Marx indicates that our main task consists of examining the genesis of the complex form from the simpler one. ‘The difficulty lies not in comprehending that money is a commodity, but in discovering how, why and by what means a commodity becomes money’.^[1553]

The teaching concerning the genesis of money from the commodity has already been set out above. We presuppose that the division of the commod­ity into the simple commodity and money has already been completed, and that two separate yet closely related spheres face one another: commodity cir­culation and the circulation of money. Now we must examine the movement of money, since on the one hand it has a special character that is distinct from the movement of commodities, while on the other hand it reflects the move­ment of the latter. We must indicate how the various forms of the movement of commodities are expressed in the different forms assumed by money. It is precisely this connection between the forms of movement on the part of com­modities and the forms of money that Marx continuously emphasises: ‘The moving relations of commodities to each other crystallise as different determ­inations of the universal equivalent, and thus the process of exchange is sim­ultaneously the process of the circulation of money’.^[1554] ‘The determinate form in which gold crystallises into money depends on how the commodities rep­resent their own exchange-value to each other’^[1555] ‘The change of form on the part of commodities themselves simultaneously crystallises into determinate forms of money’^[1556]

With regard to this process, Marx frequently uses the term ‘crystallises’. Marx’s critics have thought that when he speaks of the ‘crystallisation’ of labour in the value of the commodity, he has in view the material-technical process of the ‘settling’ or ‘congealing’ of labour in the product. As we see, the term ‘crystallisation’ is in fact used by Marx in another sense. Marx uses this term to characterise social, not technical processes. When Marx says that ‘The change of form on the part of commodities themselves simultaneously crystallises into determinate forms of money,’ he has in view the process of the gradually increasing complexity and ‘congealment’ of the social forms of things - a process in which the development of simpler forms leads to formation of more complex forms. This formation from a simpler form of more complex forms, which differ in character from the former, is what Marx calls the process of ‘crystallisation’, i.e. it is the process of detachment of more complex forms. It is readily understandable that Marx speaks so frequently of the process of ‘crystallisation’, because the fundamental task of a dialectical investigation consists of explaining the necessary formation of more and more complex forms of phenomena.

There is a dual task involved in studying the genesis of complex forms of phenomena from simple ones. On the one hand, the investigator must show how development of the simplest form leads to formation of a complex form. Here the investigator must emphasise the inseparable connection between the two forms - what they have in common and what makes the more complex form a further development or expression of the simpler form. On the other hand, however, the investigator must also show that the complex form, which has grown out of the simple one, simultaneously differs from it in character, i.e. that it represents not only further development but also negation of the properties characterising the first form. He must demonstrate that the complex form, although it has grown out of the simple one, is at the same time its antithesis.

Applying this general principle to the theory of money, here too we charge the investigator with a dual task. He must show that money has its basis in the commodity and also that money, in the process of its development, detaches from the commodity and becomes opposed to it (so that the commodity is thereby also turned into a simple commodity, i.e. the opposite of money). While in the passages quoted above Marx showed the internal connection between the commodity and money, in other places he emphasises that they are opposed to one another. Marx often says that money is essentially a distinct and specific commodity that is ‘detached’ from the sphere of other commod­ities. Gold and silver ‘oppose other commodities as the materialisation of gen­eral labour-time’.^{[1557] [1558] [1559] [1560] ‘Gold and silver, as the direct embodiment of social labour... confront other profane commodities’.*’*’ Money, consequently, has not only developed from the commodity but is at the same time opposed to the com­modity and ‘alienated’ from it. The process of the formation of money from the commodity is at the same time the process of the gradual ‘alienation’ of money from the world of commodities, a process of gradual polarisation between the character of commodities and the character of money. The different forms of money express different stages in this gradually intensifying ‘alienation’ of money from commodities.We shall demonstrate this fact using examples of the separate forms of money, which we shall consider in the same order as Marx examined them.}

Insofar as money fulfils the function of the measure of value, the alienation of money from the commodity involves its elementary, insufficiently developed character. This close connection between money, as measure of value, and commodities becomes manifest in both the origin and the character of the measure of value.

As for the origin of the measure of value, Marx never tires of repeating that the measure of value is called to life by the movement and general activ­ity of the commodities themselves. Commodities themselves ‘initially create the form in which they ideally appear to each other as exchange-values’.’⁷ ‘Because the commodities themselves assume the form of exchange-value for one another, they turn gold into the universal equivalent or into money’,’⁸ that is, into the form of measure of value. Marx wants to demonstrate that the genesis of the measure of value finds its explanation in the movement of the commodities themselves.

It is not only the genesis of the measure of value, but also its character that reveals the close connection between money and commodities. When we say that the value of a table equals ten roubles, the conversion of the commodity into money still has a theoretical and conceptual character, and the money itself is still ‘ideal’ money. Money does not yet exist as a real object, separated from the commodity, but rather appears here only as an ideal money-form, which inheres in the commodity itself and represents a property of the latter. We may even say that money represents here nothing more than a special property of the commodity itself, its money-existence or its money-form. The ‘existence of commodities as money is indeed not yet separated from their real existence’.^[1561] It follows that here the value of the commodity, likewise, is actually not yet distinguished from the natural form of the latter and does not have the form of a real thing that is opposed to the commodity. ‘The exchange­value of the commodity acquires only an ideal existence, as distinct from the commodity’.^{[1562] [1563] [1564]}

Of course, this does not mean that there is still no difference between commodities and money. If money fulfils the function of measure of value, this presupposes that the separation of money from the sphere of the commodity world has already occurred. But in its function as measure of value, money still retains a very close link with commodities and appears as one of the properties of the commodity opposed to its other properties. When we determine the value of the commodity as ten roubles, we oppose one property (i.e. its value, which equals ten roubles) to the other properties whereby it distinguishes itself as a determinate material object. Value appears as one of the properties of the commodity itself, [a property] that is ideally the antithesis of its use-value. The alienation of money from the commodity still has a preliminary and ideal character, and ‘gold is the antithesis of the real commodity only as a conceived measure of value’?¹ When money is regarded only as the money-form of the commodity itself, the latter appears as a ‘dual existence’ - in reality as use-value, and ideally as value?² The value of the commodity has still not really separated from the natural form of the product itself, as the product of concrete labour, and thus abstract labour has still not become separated and found expression in the form of a particular real object.

Thus money, in its form as measure of value, still retains avery close link with commodities: money appears as the money-form of the commodity but not as THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 777 a real object that is opposed to the commodity. This is what Marx has in mind when he says that money, as measure of value, has a ‘nebulous’ and ‘chimerical’ form.^{[1565] [1566] [1567] [1568] [1569] This form of money, as we shall see below, is the antithesis of the ‘fluid’ and ‘firm’ forms of money, in which the process of the alienation of money from commodities finds its further development.}

With the goal of following the subtle dialectical transitions from one form of phenomena to the next, Marx, in the paragraph on the measure of value, already points to the need for conversion of money from the gaseous and ghostly form just described to a more stable and fixed form. Money already partially acquires a more fixed form in the transition from measure of value to a standard of prices. When we express the value of a table not as a certain quantity of gold in terms of units of weight (for example, ounces) but rather as a certain quantity of money units (roubles, for instance), we now have greater ‘stability and exactitude of the proportions’?⁴ Gold emerges here as the ‘standard of prices’?⁵

However, in the form of standard of prices, the fixation of money still has an exclusively technical character. Ten roubles here fulfils the exact same role as does a certain quantity of gold in ounces, and accounting money does not cease to be ideal money. In order to disclose the need for further alienation of money from the commodity, we must reveal the need for the conversion of ideal into real money. This need follows from the very character of ideal money. Although ideal money appears only as the external form of the commodity itself, we must not forget that the commodity here is ideally equated with another commodity (gold) that is distinguished from it. Gold is a commodity distinct from wheat, and consequently the ideal equalisation of wheat with gold is ‘an ideal equation with gold that still has to be realised’?⁶ Thus, in the ideal form of money, as measure of value, is already hidden ‘the necessity for alienation of commodities in exchange for glittering gold and thus the possibility of their non-alienation’?7 From this follows the necessity of a transition from measure of value to means of circulation, from the less alienated form of money to the more alienated.

As means of circulation, money has a more alienated form than as measure of value. Here alienation of money from the commodity finds its further devel­opment. This is manifested in the conversion of ideal into real or actual money. ‘Gold, which as measure of value was only ideal money and in fact figured only as the money-name for commodities themselves, is transformed into actual money’.^[1570] From the money-form of the commodity itself, money is transformed into a real object existing alongside the commodity and opposed to it. If, as measure of value, ‘the money-existence of the commodity was still not sep­arated in fact from its real existence’, now the commodity, which exchanges for money as means of circulation, already ‘acquires an existence free of any tie to its natural form of existence’?^[1571] Movement of the commodities them­selves acquires the form of movement as a special thing, gold, which is external and foreign to them. ‘The changes in the form of a commodity, its transform­ation into money and its retransformation from money, in other words the movement of the total metamorphosis of a commodity, accordingly appear as the external movement of a single coin’^[1572] ‘The movement of forms of the commodity - a movement occurring in the form of a process - appears as [money’s] own movement’^{[1573] [1574] It appears to us that money sets in motion the commodities, which themselves appear to be motionless. Money is not only alien to the commodities and opposed to them, but movement of the com­modities themselves also appears to us to be the result of the movement of money, which is external to them. But since the movement itself of commod­ities is nothing more than an expression of the commodity producers’ own activities, it is not surprising that ‘their own overall movement (that of the com­modity producers), by means of which they complete the metabolism of their own labours, opposes them as the movement of a thing, as the circulation of gold’.82}

However, this alienated form of money in relation to commodities must not obscure from the investigator the indissoluble internal connection between them. This close bond appears in this context both in the origin of money and in the character of its movement as means of circulation. If gold became the measure of value, it is only because all commodities measured their value in its terms, and now it becomes real money thanks only to the overall alienation of the commodities for gold.^[1575] Money, both as measure of value and as means of circulation, reveals in its genesis its dependence upon movement of the commodities themselves.

This dependence is also revealed in the character of money’s movement as means of circulation. From the excerpts that we have already cited, we have seen that the movement of money, which seems as though it is alien and external to the movement of commodities, is actually only a reflection of the latter. ‘The circulation of money is merely a manifestation of the metamorph­osis of commodities, or a change of form through which the social exchange of things is completed’^[1576] The means of circulation is simply the ‘metamorphosed’ commodity, and the movement of gold’s metamorphosis is ‘the movement of the metamorphosed commodity’^[1577] ‘The process of the circulation (of money) is the movement of the metamorphosis of the commodity world and must, for that reason, reflect the latter in its general movement’^[1578] The movement of com­modities is reflected or reverberates in the movement of money as means of circulation.8^{[1579] [1580] This is exactly why the quantity of means of circulation depends upon the sum of the prices of commodities in circulation; and thus money, in its function as means of circulation, which is only a passing expression of the value of the commodity itself, can be replaced with symbolic money.}

While money, therefore, as means of circulation, acquires the form of a specific object, existing alongside commodities, in this function money only plays the role of mediator in the movement of commodities. As means of circulation, money serves simply ‘as the intermediary link in the dynamic unity C-M-C or as the merely transitory form of exchange-valued Money serves as mediator for the conversion of one commodity into another commodity, and gold, in this function, is simply the commodity’s own ‘transitory money-form’^[1581]

Up to this point we have been considering money in its function or form as means of circulation. In this form, money has been only a means for the circulation of commodities, and it has represented or ‘reflected’ in its own movement the movement of the commodities themselves. However, in this process of detachment, the ‘alienation’ of money from commodities does not come to a stop. In its subsequent development, money assumes a form that is even more alienated and thus becomes more strikingly antithetical to the commodity. In this case, we have money in the proper sense of the word, ‘money as such' (the hoard, means of payment and world money). Let us begin our analysis with hoards.

In this connection, as elsewhere, Marx endeavours first of all to show the origin of a new and more complex form from a simpler one and to reveal the most subtle dialectical transitions between them. For this purpose, he shows first that money, as means of circulation, already includes within itself the ‘possibility’ for the emergence of a more complex form of money in the form of a hoard. The function of money, as means of circulation, has presupposed that the circuit C-M-C represents a ‘moving unity’ in which purchase immediately follows sale. But the division of the process of exchange into two acts (of sale and purchase) already conceals within itself the ‘possibility’ of an interruption of the metamorphosis of the commodity following completion of the first act.^[1582] The possibility of such an interruption resides in the fact that the commodity, as a result of the act of sale, has assumed the form of money, ‘the golden chrysalis’, and in this form it ‘possesses it own stable existence’^[1583] ‘The golden chrysalis state forms an independent phase in the life of the commodity, in which it can remain for a shorter or longer period’^[1584]

In order for this possibility to become reality, it is necessary to indicate the causes that are at work within the sphere of commodity production and circu­lation itself that bring about a suspension or interruption of the commodity’s metamorphosis. One such cause is the circumstance that the production pro­cess continues over a more or less long period of time, whereas the purchase of commodities, to satisfy the needs of the producer and his family, must occur more frequently. Thus the commodity producer, after selling the commodities he has produced, must retain a part of the money in order to spend it gradually on the purchase of items for personal consumption. This 'retained coin’ is the transitional form between coins, or means of circulation, and a hoard. While it remains in ‘the hands of the seller, who receives it in return for a commodity, it is money, and not coin; but when it leaves his hands it becomes a coin once more’?^[1585] Or as Marx put it in Capital, money appears for a short time as a ‘crys­tal of value’ in order soon afterwards to dissolve into the transitory ‘equivalent form of the commodity’^[1586]

In the form of retained coin, there are already indications of the conversion of money from flexible means of circulation, expressing the fluid unity of the two acts of sale and purchase, into the congealed ‘crystal of value’, which indicates a suspension or ‘freezing’ of the process of circulation on the part of commodities themselves. In that event, the producer withholds money for himself precisely in order to be able to spend it whenever necessary. ‘So that money as coin may flow continuously, coin must continuously congeal into money’.^{[1587] [1588] In this sentence, Marx clearly emphasises the contradiction between the two forms of money, as ‘fluid’ and ‘congealed’, together with the origin of the latter form in the former.}

The form of retained coin, in which the first signs of the ‘congealing’ of money appear, is still not regarded by Marx as the form of a hoard. The retention of cash is only a necessary ‘technical aspect of the circulation of money’; and thus the retained money is not considered to be a hoard but only a part of the general fund of means of circulation temporarily awaiting its turn to enter into actual circulation.”⁶

Marx refuses to regard retained coin as a hoard because the temporary pause in the metamorphosis of the commodity, which we considered above, does not in the slightest degree alter the character of the commodity producer’s activities. As before, the commodity producer sells his commodity in order to use the money earned in order to purchase necessary means of subsistence. It is precisely in order to have the possibility of buying these necessary means of subsistence that he temporarily keeps for himself the retained cash.

In order for money to acquire the new form of a hoard, the character of the commodity producer’s activity must change. Such change has already been fully prepared by the preceding development of the circulation of commodit­ies and money, and it necessarily arises from this source. The commodity, being transformed through sale into money, acquires thereby a form that is capable, at any given moment, of being converted into some use-value. It acquires a form of ‘always being alienated’, i.e. a form always capable of alienation. This circum­stance alone - that the commodity producer can retain the commodity in its money-form, which is always suitable for alienation - has the capacity to evoke a change in the character of the commodity producer. The sale of commodities, in order to convert and retain them in the form of gold, becomes the motive for circulation itself. ‘The metamorphosis of commodities, C-M, takes place for the sake of their metamorphosis, for the purpose of transforming particular phys­ical wealth into general social wealth. Change of form - instead of exchange of matter - becomes an end in itself. Exchange-value, which was merely a form, is turned into the content of the movement’.^[1589]

Now we can already see a qualitative change in the character of the com­modity producer’s activities and motives. He now sells his commodity not in order to purchase use-values, but instead to retain in his hands value itself, in its money-form, always ready for alienation. It is only from this moment that money acquires the new form of a hoard.

From various perspectives Marx illuminates the dialectical connection between the new form of money as a hoard and its previous form as means of circulation. On the one hand, he meticulously discloses their internal link. We have seen that this link already appeared in the origin of the new form of money as a hoard. The emergence of this form was prepared by development of the preceding form and necessarily resulted from it. This link is reflected in the entire character of money’s functioning as a hoard. At first sight, the with­drawal of money from circulation, as a hoard, is the direct antithesis of money functioning as means of circulation. But this contradiction is only absolute so long as we limit our investigation to the sphere of money itself and leave out of account the sphere of commodity circulation, which is concealed behind it. When we also include the latter in the scope of our investigation, we shall see that the withdrawal of money from circulation occurs precisely in order to preserve the commodity in its money-form, always ready for circulation:

Commodities remain wealth, that is, commodities, only while they keep within the sphere of circulation, and they remain in this fluid state only in so far as they ossify (verknochert) into silver and gold. They remain within the flow of movement as crystals of the circulation process. But gold and silver are themselves confirmed in the role of money only insofar as they are not essentially means of circulation. As non-means of circulation, they are essentially money. Thus withdrawal of the commodity from circula­tion in the form of gold is the sole means of keeping it constantly within circulation^[1590]

With these words Marx masterfully discloses the unity and connection between phenomena that have a different appearance externally due to their antithetical character. It is precisely because the movement of commodit- THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 783 ies takes the form of alienating from itself the movement of money that the endeavour to retain the commodity in a form constantly suitable for circula­tion takes the form of the withdrawal of money from circulation as a hoard. The necessary internal connection between means of circulation and a hoard is also manifested in the fact that the commodity producer, who is accu­mulating a hoard, strives to multiply it continuously and, for that purpose, must throw into circulation newer and newer masses of commodities. The hoard, even if buried in the ground, is ‘in constant tension with circulation’.^[1591] The hoard may be buried in the ground, but ‘its money-soul, its constant endeavour to enter into circulation, moves to the person who has gathered the hoard’.^[1592]

Furthermore, the hoard maintains close contact with the sphere of circula­tion insofar as it represents the reserve fund from which money continuously flows into the sphere of circulation, and into which it continuously flows back from the latter. The need for these continuing inflows and outflows of money results from the character of money as means of circulation. As means of circu­lation, money functions in a quantity that is determined by the requirements of commodity circulation itself. And since the requirements of commodity circu­lation vary continuously in terms of money (depending upon changes in the volume of commodities, their prices, the velocity of the circulation of coin, etc.), there also emerges a continuous need to increase or decrease the quant­ity of money functioning as means of circulation. This increase or decrease is effected thanks to the continuous flows of money from the reserve fund of hoards into the sphere of circulation and back again. What occurs is ‘solidi­fication of circulating money into hoards and the flowing of the hoards into circulation’.101 This congealing and outflow, in turn, reflects the movement of the commodities themselves. The movement of money from the form of a hoard to the form of means of circulation occurs when there is a ‘fluid unity of purchase and sale’ in the commodity world. And contrariwise, when the move­ment of commodities slows, ‘the means of circulation congeal into money in unusually large measure, and the reserves of the hoards are replenished bey­ond their average levef.^ω2

To this point we have been considering the connection of a hoard with the sphere of circulation. However, this connection did not at all prevent Marx from emphasising the antithetical character of money as a hoard and money as means of circulation. Marx frequently characterises this change in the form of money as its conversion from a fluid into a congealed condition. ‘The money is petrified into a hoard, and the seller of commodities becomes a hoarder of money’.^{[1593] [1594] [1595] [1596] [1597] [1598] [1599] A contradiction emerges between ‘the fluid form of wealth and its petrified form'.ω4 The investigator must examine both of these forms of money, in their unity as well as in their contradiction. The mistake of various economic schools has consisted of the fact that they one-sidedly considered money only in one of these two antithetical forms. Thus the mercantilists considered money only as a hoard, and the classics, only as means of circulation. ‘By contrast with the monetary and mercantile systems, which knew money only in its determinacy of form as a crystalline product of circulation, it was perfectly apposite that classical [political] economy regarded money, above all, in its fluid form’.io5 Ricardo examined ‘the fluid form of money, in isolation’, as means of circulation.io6}

Marx often calls the conversion of money from the fluid into the congealed form its conversion into a ‘crystal of the process of circulation’ or the crystalline product of circulation. This process of congealment or crystallisation of money indicates that the movement of money has gained greater independence and autonomy in relation to the movement of commodities than it possessed with the functioning of money as means of circulation. In the latter case, money was only the ‘passing money-form of the commodity’. As a hoard, money is no longer the same passing form of the commodity.^ω7 Whereas money, as means of circulation, only expressed the value of the commodity itself, in its capacity as hoard of the commodity’s value money has already assumed an independent external form and been distinguished from the commodity itself. As a hoard, money is the first ‘independent existence (Verselbstdndigung) of exchange value’;^W8 it is ‘money or exchange which has assumed an independ­ent existence (verselbstdndi.gter)’}09

While Marx regarded the measure of value as a ‘gaseous’ form of money, and the means of circulation as ‘fluid’, the hoard already emerges as the ‘congealed’, ‘solid’ and ‘crystalline’ form of money. This process of the gradual ‘condensa­tion’ of money signifies that money’s movement is more and more standing apart and acquiring an independent character in relation to the movement of commodities. As measure of value, money was only ideally the antithesis of the commodity. With the development of new forms of money, the antithesis between commodities and money intensifies. As means of circulation, money was already the real antithesis of commodities, but only in order to become the passing money-form of the commodity itself in the circuit C-M-C. As a hoard, money acquires a much more independent character. Just as Catholics recog­nise only the Pope as being infallible, so gold and silver now stand opposed to all simple commodities ‘as the direct embodiment of social labour’.^{[1600] [1601] If money, as means of circulation, only played the role of ‘representative’ of commod­ities, now, insofar as the hoard is concerned, all commodities emerge merely as the ‘representatives of gold’.m Whereas previously the commodity producer viewed money as a means to acquire commodities, now he views commodities as means for the acquisition of money.}

What this discloses is the process of gradual isolation and alienation of money from commodities. Despite the fact that money arose from the com­modity and is subordinated in its movement to the movement of the world of commodities, it acquires ever-growing independence in relation to the lat­ter. The transition of money from measure of value into means of circulation, and from the latter into a hoard, is presented to us by Marx as a process of the gradual alienation, congealment and crystallisation of money.

Since we have already looked in detail at the process of the congealment or alienation of money in the form of a hoard, we can only deal briefly with [money as] means of payment. Above all, Marx believes it necessary to prove that the appearance of a new and more complex form of money results from the development and requirements of commodity circulation itself and its underlying conditions of production. Since production of diverse commodit­ies requires different periods of time, the moments of beginning and end for the production of different commodities do not correspond. The commodity producer frequently has to appear as a purchaser before he has sold his own commodity. Purchase, or M-C, must be completed before sale, or C-M, is com­pleted. Since the producer has not yet sold his commodity and therefore does not yet have money, he can only complete a purchase on credit. The seller becomes the creditor, and the buyer the debtor. After the commodity produ­cer has completed the act of purchase, or M-c, on credit, he must, according to the date specified in the agreement, retire his debt. For that purpose he now needs to complete his hitherto postponed act of the commodity’s meta­morphosis, i.e. the sale c-M. But since c-M is now completed only after the act of M-c, the character of the first act changes entirely. Now the commod­ity producer sells his commodity not in order to use the proceeds to purchase means of subsistence for himself, but instead he sells his commodity in order, with the help of the proceeds, to retire his debt. Now he wants to ‘acquire money not as a means of purchase, but as a means of payment, as the absolute form of exchange-value’.^{[1602] [1603] [1604] [1605] [1606] Money acquires the new form of means of pay­ment.}

Whereas money as a hoard was taken out of circulation, now money as means of circulation returns to circulation - no longer, however, as a ‘passing means of circulation but rather as the universal equivalent in its settled exist­ence, as the absolute commodity'.ⁿ³ ‘Means of payment enter into circulation only after the commodity has already exited from it. Money no longer serves the process. It independently completes it as the absolute form of existence of exchange-value, in other words the universal commodity'.^

Because money turns from being a mediating moment of the circulation process into its final link, it appears in more striking form as the antithesis of commodities. Money ‘enters into circulation as the only adequate equivalent of the commodity, as the absolute embodiment of exchange-value, as the last word of the exchange process'.ⁿ⁵ In money, as means of payment, we no longer have a passing money-form of the value of the commodity, but we have instead reached the ‘independent (verselbstandigter) existence of exchange­value’^⁶

Since sale of the commodity now serves the commodity producer only as a means for the acquisition of money, which he needs for repayment of a debt, all commodities now serve him only in the modest role of ‘representatives’ of money. From being a modest representative of commodities, money has become the absolute existence of value. The contradiction between commod­ities and money acquires here the most striking and acute form, especially in periods of monetary crises. It is true that the hoarder also regarded money as the sole wealth, and commodities in their natural form as things deprived of true value. But in that case it was a matter only of the imaginary annulment of the value of all commodities in face of gold as the sole embodiment of value and true wealth. So far as money as means of payment is concerned, at moments of crises we observe not just the conceivable but ‘the actual devaluation and worthlessness of all physical wealth’.^{[1607] [1608] [1609] [1610]}

Now money can no longer be replaced by profane commodities. The use-value of the commodity becomes valueless, and the value of the commodity vanishes in the face of its own form of value. Only yesterday the bourgeois, drunk with the flourishing of industry, considered money through the haze of enlightened philosophy and declared it to be an empty appearance: ‘Only the commodity is money.’ Today the cry of those same bourgeois, in all corners of the world market, is: ‘Only money is a commodity!’ As the hart thirsts for fresh water, so the bourgeois soul now thirsts for money, the only wealth. In time of crisis, the antithesis between the commodity and money - its embodiment as value - is raised to the level of an absolute contradiction.ⁿ⁸

The alienation of money from the commodity has assumed here its most acute character by comparison with the forms of money that we have considered to this point.

We have followed the gradual intensification of the antithesis between the commodity and money. But we have become convinced, at the same time, that the different functions of money are inseparably linked with one another, and that the money-circulation reflects, as a whole, the movement in the world of commodities. Moreover, we can even say that parallel with the intensification of the antithesis between the commodity and money the unity that binds them together also intensifies. Money fulfils the function of measure of value for every particular commodity, and the function of means of circulation presup­poses ‘the circulation of commodities’ in which the ‘circuit, described by the series of metamorphoses of every given commodity, is inseparably interwoven with the circuit of other commodities’^⁹ The extension of the function of a hoard indicates that the goal of the production process has become exchange­value, not use-valued²⁰ Finally, the ‘degree to which money develops as the exclusive means of payment indicates the degree to which exchange-value has taken possession of production in its entirety’.^{[1611] [1612] The increasing complexity of the forms of money, which we have been describing, reflects the increasing complexity of production relations between commodity producers:}

The process of the metamorphosis of commodities, which gives birth to the various determinations of the form of money, also involves a meta­morphosis of the commodity owners, or changes in the social character of their existence for each other. In the process of the commodity’s meta­morphosis, the commodity owner changes character as many times as the commodity changes character, or as many times as money assumes new forms. Thus, the original commodity owners opposed each other only as commodity owners; then one became a seller and the other a buyer; then each became buyer and seller in turn; subsequently they became the accumulators of hoards; and finally, they became rich people. Thus the commodity owners leave the process of circulation as different people than they were when they entered it.^m

5 Capital

To this point we have considered the categories of a simple commodity eco­nomy. Given the breadth of the theme, we shall examine the following categor­ies more briefly.

In the transition from simple commodity economy to capitalist economy, we already see a vivid example of applying the law of the unity of opposites. Viewed from the outside, the difference between them is seen in the distinction between the twoformulae of circulation: C-M-C and M-c-M. The two formulae are antithetical to each other: in the second formula, the acts of purchase and sale are the reverse of what occurs in the first. In a simple commodity economy, circulation includes sale for the sake of purchase. In a capitalist economy, circulation includes purchase for the sake of sale. In the first formula, the commodity plays the role of extremes; in the second formula, it is money. In a simple commodity economy, circulation is completed in order to exchange one use-value for another. In a capitalist economy, the purpose of circulation is the expansion of value, i.e. the acquisition of surplus value.

Despite this contradiction between the two formulae of circulation, they constitute a unity that is evident both in their historical origin and in their sim- THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 789 ultaneous operation. Historically the second formula, m-c-m, resulted from development of the first formula, c-m-c. It was only as a result of protrac­ted development of the simple commodity economy that capitalist economy appeared with its inherent formula of circulation, m-c-m. However, once the latter formula of circulation appeared, being characteristic of a capitalist eco­nomy, the formula of simple commodity circulation, c-m-c, did not disappear; on the contrary, it reached its widest development precisely from this time onwards, since it is only in the capitalist period that commodity production and circulation embraced the entire economy. Thus circulation in the form of m- c-m, being antithetical by nature to circulation in the form of c-m-c, operated simultaneously with the latter and is based upon it. ‘Insofar as the two phases, m-c and c¹-m¹, are acts of circulation, the circulation of capital constitutes part of commodity circulation in general. But insofar as they are functionally determined parts, or stages in the accumulation of capital,... capital completes its own circuit within the general commodity circulation’?²³

The unity of the two forms of circulation is revealed in their interdependence. The circulation of capital cannot be completed in the absence of commodity circulation in general. On the other hand, commodity circulation occurs in forms that are inherent in capitalism. The circulation of capital, m-c-m, can only be completed when there is a commodity in the market - labour power - completing its own circulation in the form c-m-c (the worker sells his labour power for money in order to use that money to purchase necessary means of consumption). On the other hand, the circulation of labour power, in the form c-m-c, is impossible in the absence of capital’s circulation in the form m-c-m. Alongside this interdependence of the two forms of circulation, we also observe their interpenetration. The circulation of capital includes in itself the circulation of labour power, since the capitalist purchases labour power: and conversely, the sale of labour power by the worker, i.e. the act, from the worker’s viewpoint, of entering the circulation c-m-c, simultaneously signifies the purchase of labour power by the capitalist, i.e. the act of entering the circulation m-c-m.

The unity and opposition of the two formulae of circulation, c-m-c and m- c-m, simply reflects the fact that the capitalist economy is simultaneously a further development and a negation of the simple commodity economy. It is a further development of the simple commodity economy because it arose historically from the simple commodity economy and at the same time oper­ates on the basis of commodity and money circulation. On the other hand, ^[1613] however, the laws of commodity circulation, in the conditions of capitalist eco­nomy, acquire a form that is antithetical to the forms that distinguish them in a simple commodity economy. If simple commodity economy was based upon the exchange of equivalents, in capitalist economy we are dealing with the cap­italist’s appropriation of the workers’ unpaid labour.

The exchange of equivalents, the original operation with which we star­ted, is now turned round in such a way that there is only an appar­ent exchange... The relation of exchange between capitalist and worker becomes a mere semblance belonging only to the process of circulation, it becomes a mere form which is alien to the content of the transaction itself, and merely mystifies it.^{[1614] [1615] [1616]}

But this antithesis between the laws of simple commodity economy and the laws of capitalist economy does not eliminate their unity, for ‘the original trans­formation of money into capital takes place in the most exact accordance with the economic laws of commodity production and with the rights of property derived from them'.12⁵ In other words, the capitalist economy represents sim­ultaneously both a further development and the negation of the simple com­modity economy. ‘The laws of appropriation or of private property, laws based on the production and circulation of commodities, become changed into their direct opposite through their own internal and inexorable dialectic’.^⁶ The con­nection between simple commodity economy and capitalist economy has the character, therefore, of a unity of opposites.

Now let us turn to the characteristics of capital itself. In the formula M- c-M we already see two of the basic features of capital: first, capital is self­expanding value, i.e. value that acquires surplus value; and second, capital finds itself in continuous movement, alternately taking the form of money and then the form of the commodity. These two features of capital are connected precisely with the fact that capitalism is, on the one hand, the negation of simple commodity production and, on the other hand, its further development. Insofar as capital is self-expanding value, it is distinguished by specific features that are absent from a simple commodity economy. These specific features are essentially the class relations between capitalist and worker, including the appropriation by the former of the latter’s unpaid labour. On the other THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 791 hand, capitalist relations do not eliminate commodity production but instead develop upon its basis. Just as in commodity production we have the constant movement of money and commodities, so capital must alternately take the form of commodity and money. In Volume ii of Capital Marx emphasised the need to study both of these sides of capital: ‘Capital, as self-expanding value, does not just comprise class relations, a definite social character that depends on the existence of labour as wage-labour. It is a movement, a circulatory process through different stages, which itself in turn includes three different forms of the circulatory process’.^[1617] In other words, we must study capital both in the sphere of production and in the sphere of circulation. Marx devotes the first volume of Capital to investigating the former and the second volume to the latter.

Let us consider capital in the sphere of direct production. From this point of view, we see that capital is the class relation between capitalists and workers. The emergence of these class relations signals the appearance of acute class contradictions in the society of commodity producers, which we have hitherto regarded as a homogeneous environment of completely identical commodity producers. We know that in this case the stratification of a society of identical commodity producers into two antithetical classes was a long historical pro­cess, accompanied by the violent seizure of land from the peasantry, the ruin of small commodity producers and the plundering of colonies. This was the process of primitive capitalist accumulation. The ‘separation’ of the means of production from the workers, and the appearance of capital, only occurred as a result of this long and violent historical process. We must not suppose, therefore, that Marx arrived at the category of capital by way of a simple logic inherent in development of the categories of simple commodity economy, i.e. the commodity and money. The category of capital, for Marx, is a reflection of actual reality, since real phenomena, corresponding to the categories of simple commodity economy, grew by way of a long historical process into other real phenomena corresponding to the category of capital. It is precisely because the new production relations between the class of capitalists and the class of workers became manifest in reality itself that Marx introduces into his system the new category of capital. But, on the other hand, since the new production relations between capitalists and workers operate on the basis and in the form of production relations between commodity producers, the category of capital does not eliminate the categories of commodity and money but is the further development of these same categories.

The appearance of capital signified the appearance of contradictions within the previously homogeneous environment. In Marx's words, the ‘polarisation of the commodity market' occurred together with the appearance of ‘two kinds of commodity owners', namely, the owners of the means of production and the sellers of labour power.^{[1618] [1619] [1620] [1621] There was a further development of the process of ‘alienation' that we observed in simple commodity economy. But, whereas in simple commodity economy the commodity and money were ‘alienated' from labour only after the labour process was completed, in capitalist eco­nomy the alienation of labour power from the means of production takes place even before the process of direct production. ‘These means of production con­front the possessor of labour-power as someone else's property. The buyer, conversely, is confronted by the seller of labour as another's labour-power'.129 This process of ‘alienation' and ‘detachment' of the means of production from labour power is emphasised by Marx in several of his works. Marx says the means of production oppose the worker as ‘alienated and independent', as ‘the alienated, independent conditions' of labour?30 The means of production assume an ‘alien form', a ‘detached' form and an ‘antithetical' form; i.e. a form in which they are opposed to the worker and, for exactly that reason, acquire the social character of capital.^ What occurs is the process of alienation (Ent- fremdung) of the means of production through their becoming independent (Verselbstdndigung) of the workers.}

Thus the appearance of capital marked the appearance of contradiction within a previously homogeneous social environment. What occurred here was the appearance of the greatest class antitheses and contradictions in the history of the world. This appearance of contradictions between classes is decisively important because it prepares the subjective factor of class struggle, which creates, on the basis of all the antitheses and contradictions created by capitalist economy, the possibility of transition from this economy to a new and higher stage. Thus it is precisely here, in this sphere of class polarisation that we have been describing, that the central knot of contradictions of capitalist economy is tied, which must resolve all of the latter's inherent contradictions. The entire grandiose knot of diverse antitheses and contradictions in the cap­italist economy can only be resolved thanks to the powerful class contradiction between capital and labour that occurs in the sphere of direct production.

The contradiction between capital and labour does not eliminate their inter­action. The means of production, constituting capital, are created by human labour; and from this point of view they represent objectified labour as distinct from living labour. But in the conditions of capitalist economy, this objectified labour has come to dominate living labour: capital has subordinated labour to itself and absorbed it. This inclusion of labour in capital occurs when labour power exchanges itself for variable capital and is already part of capital in the process of direct production.

This Interaction between capital and labour imposes special features upon both of them and evokes a certain ‘bifurcation’ of both capital and labour. Because capital must be exchanged for labour power, it separates into two parts. That part of capital spent directly on the purchase of labour power is called variable capital. The part of capital spent on acquiring material means of production is called constant capital. The need for this bifurcation of capital is explained by the dual character of labour as abstract and concrete. Insofar as the capitalist is interested in appropriating unpaid labour, he expends capital on the hiring of labour power. But insofar as the worker’s labour is not merely abstract but also concrete labour, in order to be applied it requires the presence of determinate means of production. In order to set labour power in motion, the capitalist must buy not only this labour power but also certain means of production. Accordingly, part of the capital must be converted into constant capital.

We also see a ‘bifurcation’ in the sphere of labour. Due to the fact that labour is purchased by capital, it separates into two parts: paid and unpaid labour. The value created by the worker’s labour is divided into two parts: the value of labour power and surplus value. In turn, the surplus value ‘bifurcates’ and assumes two forms: absolute and relative surplus value. And in this connection Marx notes not only the difference between these two forms of surplus value but also their interdependence and the passing of one form into the other.^[1622]

Thus far we have established two divisions. Capital separates into constant and variable; and the value created by the worker’s labour separates into the value of labour power and surplus value. But we must not forget that the value of labour power is exactly the same as the variable capital. Indeed, it is precisely variable capital that pays the value of labour power. If we therefore include the value of labour power in capital itself, we reach a new antithesis of capital and surplus value. Thus we have three pairs of contradictions: 1) constant and vari­able capital; 2) the value of labour power and surplus value; and 3) capital and surplus value. The relation between constant and variable capital determines the organic composition of capital (c/v); the relation between surplus value and the value of labour power determines the rate of surplus value (s/v); and finally, the relation between surplus value and capital determines the rate of profit (s/c+v). Each of these magnitudes is characterised by a certain tendency of movement that depends, in the final analysis, upon the development of labour productivity. As the productive power of labour grows and the successes of technique advance, the relative measure of constant capital increases by com­parison with variable capital, and thus the organic composition of capital rises and creates the basis for a powerful concentration of capital. This development of labour productivity, which cheapens the means of consumption of the work­ers and thus the value of labour power, acts in the direction of raising the rate of surplus value. Finally, the rise in the organic composition of capital creates a tendency to reduce the rate of profit.

From capital in the sphere of production we turn to capital in the sphere of circulation. We have thus far considered capital as the class relation between capitalists and workers, i.e. we have considered the specific features of cap­ital that distinguish it from simple commodity economy. As we already know, though, capitalist economy is the further development of the same commod­ity economy. With the appearance of capital, the commodity and money do not disappear; they become subordinate moments of capital's own movement. Capital alternately takes the form of commodity and money when passing through different stages. ‘In the circulation M-c-M both the money and the commodity function only as different modes of existence of value itself... [Value] is constantly changing from one form into the other'.^{[1623] [1624] Whereas in simple commodity economy we observed the process of division of the com­modity into the simple commodity and money (and thus the division of value into the commodity form and the money form), now it seems that we revert to value in general. Capital is self-expanding value. This value alternately takes first one form and then the other. ‘Those who consider the autonomisation (Verselbstandigung) of value as a mere abstraction forget that the movement of industrial capital is this abstraction in actu. Here value passes through different forms, different movements in which it is both preserved and increases'.^4 The process of the ‘independent isolation' of value here reaches its highest devel­opment. ‘In capital, the autonomisation of value (Verselbstandigung) appears much more powerfully than in money’.[1625] [1626] [1627] Capital in circulation represents a unity of opposites - of the commodity and money.}

We have seen that capital, in the sphere of direct production, is a unity of opposites - of materialised and personal factors of production that are ‘alienated’ and ‘isolated’ from each other - which takes a contradictory class form. In just the same way, capital in the sphere of circulation represents a unity of opposites - of the commodity and money, in other words, of commodity­capital and money-capital. Finally, capital as a whole also represents a unity of opposites, namely, a unity of capital in production and capital in circulation.

The reproduction process of capital as a whole is the unity of its pro­duction phase and its circulation phase, so that it comprises both these processes or phases... If they were only separate, without being a unity, then their unity could not be established by force and there could be no crisis. If they were only a unity without being separate, then no violent separation would be possible implying a crisis.^⁶

We can now summarise. We can consider the appearance of capital as a process in which are simultaneously realised: 1) the sociological law of the differenti­ation of social groups and classes; 2) the economic law of the reification of pro­duction relations between people; and 3) the general dialectical law of the unity of opposites. We already observed, in simple commodity economy, the process of the differentiation of functions between commodity producers. We saw the appearance of new ‘social characters’ on the part of the commodity producer: the accumulator of a hoard, the creditor and the debtor. But all of these were the sort of functions that were alternately fulfilled first by one commodity pro­ducer and then by another; these functions were not ‘crystallised’ in specific persons. True, Marx noted that the function of creditor already revealed the capacity for a ‘more stable crystallisation’,^⁷ i.e. the capacity to become fixed either permanently or for a long time in particular persons. But in simple com­modity economy, as a general rule, the creditor and debtor are not members of different classes but only different functions that are alternately fulfilled by different commodity producers. It is only with the appearance of capitalists and workers that the division of commodity society into classes occurs; only from that time does there appear an acute class contradiction between persons who possess the means of production and persons who are condemned for an entire lifetime to sell their labour power. This appearance of class contradic­tions marked an entire historic upheaval, a leap from a society of homogeneous commodity producers to a society of commodity producers who are torn apart by class contradictions.

Parallel with this growing complexity of the production relations between people, the economic forms of things also became more complex; whereas previously the product of labour assumed the form of commodity or money, now came a new social form - capital. In capital, the fetishisation of production relations acquires a more concealed and obscure form than in the commodity and money. Already, in the process of direct production, ‘capital becomes a very mystical being, since all the productive forces of social labour appear attributable to it, and not to labour as such, as a power springing forth from its own womb’.^{[1628] [1629] [1630] In the process of direct production, the productive forces of labour already appear to be the productive forces of capital. Capital emerges as value that is capable of self-expansion. Further fetishisation of production relations between people occurs in the sphere of the circulation of capital. This sphere of circulation gives rise to new ‘determinations of form’/'19 to ‘new forms arising from the process of circulation’,140 for instance, the forms of fixed and circulating capital and so forth. For this reason the illusion appears that value and surplus value emerge in the process of circulation.}

The process that we have described, of the differentiation of social groups and the reification of production relations between people, takes place on the basis of the general dialectical law of the unity of opposites. The appear­ance of capital signifies the appearance of class contradictions in the formerly homogeneous social sphere of commodity producers. The unity of opposites between capital and wage-labour in the sphere of production; the unity of opposites between the commodity and money in the sphere of circulation; and the unity between capital in production and capital in circulation - in all of these phenomena we see the realisation of the general dialectical law of the unity of opposites.

6 The Circulation of Capital

Marx’s doctrine concerning the circulation of capital results from his teaching on the unity of capital in production and capital in circulation. Actually, capital THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 797 in circulation must assume two different forms: money capital and commodity capital. Consequently, capital in circulation divides, and in place of the former two-sided division of capital we get a three-sided division: money capital, productive capital and commodity capital. This is the doctrine of the different functions or phases in the movement of capital.

In reality, these different phases of capital’s movement stand apart from one another as three detached forms of capital that are opposed to one another. On the surface of phenomena we see: 1) industrial capital that is involved directly in the process of production; 2) commodity-commercial capital, or merchant capital, that is involved in servicing the sphere of circulation; and 3) money­commercial capital that is in the hands of money capitalists and lent by them to capitalists in production. We have here three completely separated forms of capital, belonging to three different groups of the capitalist class, moving as if on the basis of completely different laws and opposing each other as independent spheres of capital investment.

What is it that constituted the upheaval caused by Marx in his teaching on the circulation of capital? This upheaval is the same as the one caused by his teaching on money. The contradiction between the commodity and money, which oppose each other in space, was transformed by Marx into the sequence of the commodity’s movement through two antithetical phases. Marx regarded objects that are distributed alongside one another in space as different phases of the movement of one and the same process in time. Marx also applied this approach in his teaching on the circuit of capital. He showed that all three spheres of capital, existing beside one another in space, must be considered as different phases or stages of movement of one and the same capital, i.e. as parts of a single integral process and not as independent and isolated phenomena. Money and commodity capital must be deprived of their separation and be regarded as detached parts of the single process of capital’s movement.

Money capital and commodity capital, in so far as they appear and func­tion as bearers of their own peculiar branches of business alongside industrial capital, are now only modes of the independent existence (verselbstandigte) of the various functional forms that industrial capital constantly assumes and discards within the circulation sphere.^[1631]

Thus Marx reduces the external antithesis of three detached forms of capital to a sequence of phases in the movement of one and the same capital. Every capital must pass through three phases: the first is money capital, the second is productive capital, and the third is commodity capital. From the contradiction between phenomena in space we turn to the development of phenomena in time. We convert the external antithesis of the three detached forms of capital into an internal antithesis of capital as a single process that necessarily passes through three distinct stages of movement. The structure of Volumes ii and iii of Marx's Capital becomes clear to us from this point of view. In the third volume of Capital, commodity-commercial capital and money-commercial capital emerge as detached and independent spheres of the application of capital. But we cannot understand the laws of their movement as long as we consider them as detached and isolated forms of capital: the laws of their movement can only be disclosed if we consider these forms of capital as parts and moments of the process of capital's movement as a whole. And it is precisely in Volume ii of Capital that Marx transforms commodity-commercial capital into the commodity form of industrial capital.

Money capital, commodity capital and productive capital thus do not denote independent varieties of capital, whose functions constitute the content of branches of business that are independent and separate from one another. They are simply particular functional forms of industrial capital, which takes on all three forms in turn.^{[1632] [1633] [1634]}

Once we have reduced the three opposing forms of capital to three phases in the movement of one and the same capital, we consider these three phases as revealing the internal contradictions that are hidden in the nature of capital. The necessity of the differentiation within capital of three distinct phases or stages of movement follows from the very nature of capital, which represents self-expanding value alternately taking the forms of commodity and money. In this movement is revealed the internal antithesis hidden within capital: in this function as circulation capital, it is distinguished from its own existence as productive capital. These are two separate and distinct forms of existence of the same capital'.^³ We find ‘the different forms with which capital clothes itself in its different stages'.i44

Once capital alternately passes through three different phases (money, pro­ductive and commercial capital), at any moment one part of capital is in one phase, a second part in another, and a third in a third phase. The sequence itself of the phases of capital’s movement in time leads to the simultaneous exist­ence of three different forms of capital in space. ‘The sequence in space is itself only a result of the sequence in time’.^{[1635] [1636] [1637] ‘The forms are therefore fluid forms, and their simultaneity is mediated by their succession’.^6}

In order, therefore, to understand the laws of capital’s movement, we must consider capital as a unity of opposites, or as a unity of three different phases. But that is not all. Suppose we do see capital as the unity of three phases (money, productive and commodity capital), i.e. in the form of circulation M- c... p... C-M. Although we have taken into account all three phases of capital, our investigation is still one-sided because we began with the money form capital and concluded with the money form. From this one-sided viewpoint, the circulation of capital appears to us as the circulation of money capital; the circulation of capital will appear differently to us if we begin and end our examination from a different viewpoint with the phase of industrial capital. In that case we have the circuit of productive capital (p... C-M-C... p). Finally, if we begin our examination by taking the phase of commodity capital, we have the circuit of commodity capital (c1-m1-c... p... Ci). The mercantilists considered the entire circulation of capital from the first point of view, the classics did so from the second point of view, and the physiocrats from the third point of view. As a result, the investigation of capital by the economists of all three of these schools had a one-sided character. We only reach a complete representation of the circulation of capital when we consider it from all three points of view, i.e. as the circulation of money capital, as the circulation of productive capital, and as the circulation of commodity capital.

If we take all three forms together, then all the premises of the process appear as its result, as premises produced by the process itself. Each moment appears as a point of departure, of transit, and of return. The total process presents itself as the unity of the process of production and the process of circulation; the production process is the mediator of the circulation process, and vice versa.i4⁷

We see just how necessary the application of the law of the unity of opposites is for understanding capital's movement. We must consider the process of capital's movement not simply as the unity of three antithetical phases, but also as the unity of three circuits of capital. ‘The total process is in fact the unity of the three circuits, which are the different forms in which the continuity of the process is expressed'.^{[1638] [1639] [1640]}

Marx does not stop with reducing the opposing forms of capital to the unity of capital's movement through three different phases. Analytically reducing the entire process to its unity, he then shows us how the three independent and separate forms of capital become detached from a single capital. He follows the process of the ‘separation' and ‘alienation' of the different forms of capital from each other. This alienation consists of the fact that the different functions of capital, for instance the commercial operations, now become not the incid­ental operations of the industrial capitalist himself but instead separate out and become the special operations of a special group, the merchants; what occurs is the ‘detachment' of a special group from the capitalist class, devot­ing itself to servicing the commercial or the money circulation.

Of course, this break up of the capitalist class into three separate groups is explained, in the final analysis, by development of the material process of production, by expansion of the market and the growing volume of production. These changes in the process of the production and exchange of commodities make it impossible for the industrial capitalist to combine in his own person the functions of director of production, of merchant, of banker and so forth. A ‘separation' and ‘alienation' of these functions from one another occurs; for example, special groups of merchants appear. From this moment, ‘instead of being an incidental operation carried out by the producer himself, this function (trade) now appears as the exclusive operation of a particular species of capitalist, the merchant, and acquires independence (verselbstandigt) as the business of a particular capital investment'.^⁹ The separation and detachment of money-commercial capital occurs in exactly the same way. ‘A definite part of the total capital now separates off and becomes autonomous (verselbstandigt) in the form of money capital, its capitalist function consisting exclusively in that it performs these operations... for the entire class of industrial and commercial capitalists'?⁵⁰

This separation of a special group of capitalists is a clear illustration of the further differentiation of social groups and of the further deepening of the social division of labour. With regard to the separation of commercial capitalists, Marx writes that ‘It is a particular form of the social division of labour’.^{[1641] [1642] [1643]}

As we see, commodity-commercial capital and money-commercial capital are only detached parts of the single process of the movement of capital. It follows, in the first place, that the laws of their movement can only be understood on the basis of the general movement of industrial capital as a whole; and secondly, that these detached forms of capital acquire a certain relative autonomy that appears in the specific laws of their movement; in other words, the movement of these detached parts of capital can be understood only on the basis of the law of the unity of opposites.

Marx frequently emphasises this dual character of the detached parts of capital. On the one hand, he emphasises their connection with the movement of capital as a whole: ‘The movements of this money capital are thus again simply movements of a now independent (verselbstandigter) part of the indus­trial capital in the course of its reproduction process’.^² On the other hand, however, once this part of capital becomes detached it has already assumed a certain relative autonomy and becomes subordinate to particular laws.

In commercial and money-dealing capital, the distinction between indus­trial capital as productive capital and the same capital in the sphere of circulation attain autonomy (verslbstandigt) in the following way: the specific forms and functions that capital temporarily assumes in the lat­ter case come to appear as independent forms and functions of a part of capital that has separated off and become completely confined to this sphere.15³

Engels also emphasises this relative autonomy of the parts that have separated off. Engels considers this process of separation of the various forms against the broad background of the social division of labour.

Where there is division of labour on a social scale, the various sections become mutually independent. Production is, in the final analysis, the decisive factor. But as soon as trade in products becomes independent of actual production, the former follows a trend of its own which is, by and large, undoubtedly dictated by production but, in specific cases and within the framework of that general dependence, does in turn obey laws of its own, laws inherent in the nature of this new factor; it is a trend having its own phases and reacting in turn on the trend of production.^{[1644] [1645] [1646] [1647]}

In the same way the trade in money develops ‘in its own way subject to the special laws and distinctive phases determined by its own nature’.^

It is precisely this relative autonomy of commodity-commercial and money­commercial capital that conceals from our view their unity and connection with the process of industrial capital’s movement as a whole. If commer­cial operations were not conducted by a special merchant, but instead by agents employed by the manufacturer himself, ‘this connection would not be obscured for one moment’.^⁶ But once the detachment of a special group of merchants has occurred, commodity-commercial capital externally separates from industrial capital, and precisely this ‘autonomous separation’ ‘conceals various moments of the movement’.^⁷ Money, productive and commodity cap­ital, being in fact only moments of the single process of capital’s movement, become detached and acquire a certain autonomy, acting - or so it seems from the outside - autonomously and independently of each other. This is exactly why economists, observing the outer surface of phenomena and consider­ing commodity-commercial and money-commercial capital in their ‘detached’ form, were not able to understand the internal laws of capital’s movement; they came to the most absurd conclusions concerning the emergence of commercial profit within the sphere of circulation itself. It was only Marx who succeeded in clarifying the problem of commercial profit because he shattered the external illusion of the independent movement of commodity-commercial capital and considered it as inextricably connected with the movement of industrial cap­ital as a whole. Only application of the law of the unity of opposites enabled Marx to resolve this difficult problem.

As we see, in his teaching on the circulation of capital, Marx again showed us the realisation of the three laws mentioned above. On the one hand, we observe a picture of the gradually increasing complexity of the class structure of society. In the teaching on simple commodity economy, we had to deal only with simple commodity producers; in the doctrine of capital, we deal with the production relations of two classes of society, the capitalists and the workers; and finally, in the teaching on the circulation of capital, we see a further complication of the THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 803 social structure - the disintegration of the capitalist class into several special and independent groups (industrial, commercial and money capitalists).

As the complexity of the production relations between people and of the social forms of things grows, the process of reification and the fetishisation of people’s production relations also develop. Commodity-commercial capital and money-commercial capital acquire an independent form, separated and detached from the direct process of production; and, thanks to this, the illusion arises of the formation of surplus value in the circulation process, and the production relations between members of society take on a more intricate and fetishised character.

The process of increasing complexity that we have been describing, along with the reification of production relations between people, occurs in conform­ity with the general dialectical law of the unity of opposites. The movement of capital, which we previously considered as a single process, falls apart into a series of detached and relatively autonomous spheres, in each of which we find specific forms of movement. Contradiction emerges within a group of phenom­ena that form a unity but, on the other hand, unity is preserved between these opposing phenomena. The detached parts of capital (commodity-commercial, money-commercial and productive capital), although they possess relative autonomy, are still altogether subordinated in their movement to the laws of industrial capital’s movement as a whole. The movement of the production process continues to prevail over all the parts of capital that have become detached from it and acquired their own outwardly independent and alien form.

7 The Dissolution of Surplus-Value into Incomes

As we have seen above, the value of the annual product in capitalist society (including the value of the expended means of production) splits into capital and surplus value. We have already traced the process of the complication and detachment of the separate parts of capital. Now we must consider the process of the gradual complication and detachment of the different parts of surplus value; in other words, the process of the dissolution of surplus value into separate types of non-labour incomes (the profit of enterprise, interest, commercial profit and ground rent). Marx devoted the greater part of Volume iii of Capital to this question. In a letter to Engels, Marx wrote: ‘In Book iii we then come to the conversion of surplus value into its different forms and separate component parts’.^[1648]

The disintegration of surplus value into different forms of revenue is a pro­cess that runs parallel to the process described above of the disintegration of industrial capital into separate and autonomous forms. Actually, once the dissolution of capital into commodity-commercial, money-commercial and industrial capital - belonging to different groups of capitalists and constituting separate branches - has occurred, it is perfectly understandable that surplus value has also divided into separate parts, acquired by different groups of cap­italists and having different forms. On the surface of phenomena we already encounter these different types of non-labour income in finished and inde­pendent form or, as Marx says, in ‘solid’ form. We already encounter forms of income that are separate from one another (the profit of enterprise, commer­cial profit, interest), are externally distinct from one another, and appear to move independently of each other, each on the basis of its own inherent laws. And in this case the first task facing Marx was to uncover the unity lying at the basis of these different forms of non-labour revenues in order to deprive them of their seeming independence and present them as detached parts of a single mass of surplus value. In their theory of value the classics had already outlined a way to resolving this question, but they were still not familiar with surplus value in its general form. It was only Marx, with his doctrine of surplus value in Volume I of Capital, who really revealed the unity underlying all non-labour revenues. It was with good reason that Marx considered the very best part of Capital to be his doctrine of the dual character of labour along with that of surplus value; that is ‘the treatment of surplus-value regardless of its particu­lar forms as profit, interest, ground rent, etc.’.^{[1649] [1650] In another letter Marx spoke even more clearly of the singularity of his doctrine of surplus value: ‘in contrast to all previous political economy, which from the outset treated the particular fragments of surplus value with their fixed forms of rent, profit and interest as already given, I begin by dealing with the general form of surplus value, in which all these elements are still undifferentiated, in solution as it were’?60 Here Marx expressed the central idea that guided him throughout his entire investigation, the idea of conversion of the frozen and detached social forms of things, which externally oppose and contradict one another, into parts of a single fluid process, parts of the single mass of social labour at the disposal of society.}

As we have already seen, however, Marx never restricted himself to the ana­lytical reduction of detached social forms to a single process of which they are THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 805 parts; in addition, he always takes the reverse synthetic route and shows us the process of gradual detachment and alienation of these different social forms, the process of the ‘genesis of forms’. The causes of this detachment of the sep­arate forms of surplus value were clarified in the doctrine of the circulation of capital. The detachment of separate spheres of capital investment occurred as the process of material production and exchange expanded; simultaneously, the class of capitalists dissolved into separate groups, and surplus value dis­solved into separate types of non-labour revenues. Just as the separate forms of capital move as if independent of each other, so the different parts of surplus value become detached from one another and acquire the form of separate and independent revenues, moving as if on the basis of different laws. ‘The different components of surplus-value appear in the form of mutually inde­pendent revenues’.^{[1651] [1652] [1653] ‘The division of profit into profit of enterprise and interest... completes the autonomisation (Verselbstandigung) of the form of surplus­value, the ossification (Verknδcherung) of its form as against its substance, its essence'.i62}

Together with profit, a special form of revenue appears, interest, which moves on the basis of distinct laws. The appearance of interest means the further detachment and alienation of surplus value from its source - social labour. Whereas profit still retains a memory of its origin in labour, with interest the connection between revenue and the surplus labour of the workers is completely torn apart.i6³ Thus interest-bearing loan capital, as Marx often puts it, is the ‘most alienated’ form of capital. This ‘self-acting fetish’ is completely torn apart from the direct process of production, having acquired independent existence and appearing to be an independent source of non-labour revenue. The process of the fetishisation of social relations reaches the extreme.

In ground rent we find an equally extreme detachment and fetishisation of the social relations between people:

Since in this case one part of the surplus-value seems directly bound up not with social relations but rather with a natural element, the earth, the form of mutual alienation and ossification (Entfremdung undVerknδcher- ung) of the various portions of surplus-value is complete, the inner con­nection definitively torn asunder and its source completely buried, pre­cisely through the assertion of their autonomy (Verselbstandigung) vis-a­vis each other by the various relations of production which are bound up with the different material elements of the production process.^{[1654] [1655] [1656] [1657]}

The various parts of surplus value, which in fact serve to express social rela­tions between people, fasten onto separate material elements of production and seem to originate in the latter; the land appears to bring forth rent, cap­ital begets interest, and labour creates wages. ‘Capital, landed property and labour appear to those agents of production as three separate and independent sources, and it appears that from these three arise three different components of the annually produced valued*’⁵’ Vulgar economists generalise these notions of the capitalists with the Trinity Formula that Marx critically scrutinised in chapter 48 ofVolume iii of Capital.¹** Instead of reducing the different types of non-labour revenues to their single source - surplus value and surplus labour - vulgar economists, with their formula, only reflect the external detachment and alienation of different forms of non-labour income that strike the eye on the surface of capitalist society.

The detachment of different forms of non-labour income explains to us the illusion that arises in capitalist society. The value of products (if we subtract the value of expended means of production) breaks down into ‘three component parts, which take the shape of autonomous and mutually independent forms of revenue, namely wages, profit and ground rent'd*⁷ But these forms of revenue, being results of the production process, are simultaneously its presuppositions. The capitalist, upon entering into the production process, already anticipates the need to acquire a definite sum of profit, interest and ground rent as a result of this process. It seems to him that the value of the product consists of these revenues; and the revenues appear to him as something primary with the value of the product as something derivative, which is acquired as a result of adding up revenues. He perceives the entire process

not as the dissolution of a value magnitude given in advance into three parts which assume the mutually independent forms of revenue, but con­versely as the formation of this value magnitude from the sum of the com­ponent elements of wages, profit and ground-rent, taken as determined independently and separately. The reason why this illusion would neces­sarily arise is that in the real movement of individual capitals and their commodity product it is not the value of commodities that appears [as] the premise of its own dissolution but, on the contrary, the components into which it can be dissolved function as the premises for a commodity’s value.^{[1658] [1659]}

This illusion explains the debate that bourgeois political economy is waging up to the present day over which is the primary element, value or revenues. We already find two answers to this question in Adam Smith, who correctly claimed that the value of the product dissolves into revenues, but then he mis­takenly thought the value of the product is composed of revenues. The first viewpoint was adopted and further developed by Ricardo; the second view­point became the basis for the schemes of vulgar economists. Marx carried forward the work of Ricardo. He began his investigations with the value of the product, defined as a quantity of [labour in] the commodity, and then dis­closed the origin of surplus value and the process of its dissolution into the separate non-labour incomes. But Marx did not stop there: he pointed out that revenues, being the result of the production process, become simultaneously its presupposition. In particular the average profit, added to the costs of pro­duction, forms the commodity’s price of production. Thus the revenue (namely, the average rate of profit), being secondary in relation to the value of the com­modity, in turn determines the commodity’s price of production.

The seeming independence of the separate types of non-labour income does not alter the fact that they are all components of a single mass of surplus value and move within limits determined by the magnitude of the latter. And since surplus value, together with the value of labour power, are only parts of a common sum of value, newly produced by the labour of workers, it is understandable that a close connection and interaction exist between the movement of non-labour revenues and the movement of wages. With his teaching on revenues, Marx created a scientific basis for the understanding of class struggle, and he underlined this fact in his letter to Engels where he sets outthe contents ofVolume iii of Capital: ‘since those 3 items (wages, rent, profit (interest)) constitute the sources of income of the 3 classes of landowners, capitalists and wage-labourers, we have the class struggle, as the conclusion in which the movement and disintegration of the whole shit resolves itself’ [der Klassenkampf als Schluβ, worin sich die Bewegung und Auflosung der ganzen Scheiβe auflost].i6⁹

8 Crises

We have traced the grandiose process of the detachment and alienation from one another of the different production relations between people and the vari­ous parts of social labour, which take on distinctive and independent forms (the commodity, money, capital and surplus value, the different forms of cap­ital, and the various non-labour incomes). This process of detachment and ali­enation of people's production relations, and the corresponding social forms of things, arises due to the disorganisation and anarchy of capitalist production. But, on the other hand, the development of capitalist economy is accompanied by enormous growth of the productive forces and ever-increasing integration of the process of material production, which embraces the most diverse parts of the globe and makes them all into elements of a single system of the social division of labour. This growth in the unity of the system of material production occurs parallel with a multiplication of the social forms of things, which have become frozen and alienated, are externally antithetical to one another, and act with relative autonomy. This detachment of the production relations between people, and of the social forms of things, is one of the main moments to which Marx points in his theory of crises. Marx considers a crisis as the moment when the external detachment of separate processes has reached it greatest force, when their relative autonomy and their movement according to their own rel­atively different laws leads to destruction of the unity of the social production process, a unity that lies at the foundation of all these detached forms. ‘When the assertion of their external independence (Verselbstandigung) proceeds to a certain critical point, their unity violently makes itself felt by producing - a crisis'.^{[1660] [1661]}

Our task does not include a presentation of Marx's theory of crises. Marx sees the fundamental cause of crises in the inevitable contradictions of a capitalist economy between the striving for unlimited growth of the productive forces and the limited basis of the production relations between people. ‘It is the uncondi­tional development of the productive forces, and therefore mass production on the basis of a mass of producers who are confined within the bounds of the necessary means of subsistence on the one hand and, on the other, the barrier set up by the capitalists' profit, which [forms] the basis of modern over­production'.™ Here Marx shows, in abbreviated form, the fundamental causes of crises. On the one hand, the mighty development of productive forces on the basis of cooperation, machines and other advances of technique lead to THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 809 colossal growth of production; but the limited ‘conditions of distribution and consumption’^{[1662] [1663] [1664] [1665] under capitalism - which are the other side of the produc­tion relations between people - do not correspond to this colossal growth of the productive forces. The constraint that development of the productive forces encounters in the conditions of distribution and consumption lies first in the fact that production can only be conducted so long as it provides the capitalist with the average rate of profit, and secondly in the fact that the con­sumption by an enormous mass of society, on the basis of antagonistic relations of distribution, is reduced to a minimum that varies only within narrow lim- its.173 The contradiction between productive forces and production relations is expressed, therefore, in the contradiction between production and distribu­tion and between production and consumption. The crisis is directly expressed in the impossibility of realising commodities at prices that deliver the aver­age rate of profit, i.e. in the contradiction between the process of the direct production of capital and the process of capital’s circulation. In crises, there­fore, is manifested the contradiction between all the aspects of a single process of social production that have become detached from one another: between production and circulation, production and distribution, and production and consumption.}

Crises are inherent only in the capitalist economy, not in a simple commod­ity economy. But since division of the commodity into commodity and money - and thus dissolution of the single act of exchange into two independent acts of purchase and sale - already occurs in simple commodity economy, here there is already a possibility (although not a necessity) of crises.^⁴ It is interesting to show that all the forms of detachment that we have been considering above - of people’s production relations and of the social forms of things - are considered by Marx to be the conditions or moments of a crisis.

We began our presentation with dissolution of the commodity into the commodity and money; this metamorphosis of the commodity, in which the contradiction between value and use-value is already manifested, is ‘the most abstractform of crisis (and therefore the formal possibility of crisis)'.i7^>

Since they (purchase and sale) are connected with one another, the detachment (Verselbstandigung) of these two interconnected moments can only show itself forcibly, as a destructive process. It is precisely in a crisis that they show their unity, a unity in difference. The independence that these interconnected and complementary moments have assumed in relation to each other is forcibly destroyed. Thus the crisis manifests the unity of two moments that have become detached (^erselbstandigten) from each other.^{[1666] [1667] [1668] [1669]}

Therefore, the dissolution of the commodity into commodity and money cre­ates the first and most abstract possibility of a crisis. In the doctrine concern­ing the functions of money, we traced the gradual alienation of money from the commodity; this alienation became very pronounced in the function of means of payment. Indeed, the appearance of this function of means of pay­ment begets the second condition for the possibility of crises since, given the connection of a whole series of commodity producers through a chain of debt obligations, the impossibility of one of them selling his commodities immedi­ately affects the entire series of others. ‘It can therefore be said that the crisis in its first form is the metamorphosis of the commodity itself, the falling asun­der of purchase and sale. The crisis in its second form is the function of money as a means of payment... Both these forms are as yet quite abstract, although the second is more concrete than the first'.i77 In a capitalist economy, with its widespread branches connecting debt claims and the obligations of commod­ity producers, development of money's function as means of payment plays an especially important role as a condition making the appearance of crises pos­sible.™

Thus far we have been dealing with the categories of a simple commod­ity economy that give rise to the possibility of a crisis but not the necessity. The necessity of crises lies not in the conditions of a simple commodity eco­nomy but in the conditions of a capitalist economy, to which we now turn: ‘The contradictions inherent in the circulation of commodities, which are fur­ther developed in the circulation of money - and thus, also, the possibilities of crisis - reproduce themselves, automatically, in capital, since developed circu­lation of commodities and of money, in fact, only takes place on the basis of capital'.i7⁹ Insofar as we are investigating the sphere of the direct production of capital, we will not find any new elements that would explain to us the possib­ility and necessity of crises. It is true that, insofar as the process of production is the process of producing surplus value, it already contains those contradic­tions that find their expression in crises; but this possibility of crises can only show up due to dissolution of the process of production of capital into the pro­cess of direct production and the process of circulation.^{[1670] [1671] In this dissolution we find reproduced, in a new form and on a new basis, the dissolution of the com­modity into the commodity and money, which, as we have already seen above, represented the first and most abstract possibility of crises:}

The total process of the reproduction of capital is a unity of its phase of production and its phase of circulation; it is one process that passes through two processes as its phases. Therein lies a more developed possib­ility or abstract form of crisis... Crisis is the forcible establishment of unity between moments that have become detached and the forcible detach­ment of moments that are essentially one.181

A crisis arises on the basis of detachment of the sphere of capital’s circula­tion from the sphere of direct production. We have seen, however, that even within the sphere of circulation capital takes the different and detached forms of commodity-commercial and money-commercial capital; each of these has relative independence from the process of production and moves on the basis of specific and particular laws. This detachment of the different parts of cap­ital also constitutes one of the important conditions for a crisis. Detachment of the sphere of trade from the sphere of production; the dissolution of trade into wholesale, retail, etc.; and the independent and unique movement of loan capital and interest - all of these phenomena, as we know, play a significant role in explaining the course of crises.

Following the detachment of different forms of capital, we considered the detachment of different parts of surplus value in the form of specific non­labour revenues (profit, interest, commercial profit, and rent). We entered the sphere of distribution, in which the production relations between people emerge simultaneously as those of distribution. For Marx, the relative auton­omy of movement that separate revenues acquire is also one of the most essential moments affecting the crisis. We know that the separate types of revenue are not simply the result but also the presupposition of the production process, and above all that is the role played by the average rate of profit, which is the regulator of the expansion and contraction of production. The capitalist anticipates in advance the average rate of profit and, depending upon the possibility of receiving a higher or lower rate of profit, he either expands or contracts production. This autonomous role of the average rate of profit, which is anticipated in advance by the capitalist, has enormous significance for understanding crises. Essentially speaking, the crisis comes exactly when the conditions for the capitalist to receive the average rate of profit disappear. ‘Periodically too much is produced in the way of means of labour and means of subsistence, too much to function as means for exploiting the workers at a given rate of profit’.^{[1672] [1673] [1674] In this connection Marx attaches enormous importance in his teaching on crises to the law of the tendency for the rate of profit to fall.}

However, the presuppositions of the production process include not only the norm of profit but also the other non-labour revenues. Their magnitude is taken as pre-given, and participants in production expect in advance to acquire these non-labour revenues in a certain amount. ‘One part of the average profit, in the form of interest, confronts the functioning capitalist from an independent position as an element already presupposed in the production of commodities and their value... The same can be said of ground-rent’.^³ So long as pro­duction continues under the previous conditions, these revenues are actually received in the customary measure, and the expectations of production parti­cipants are in fact justified. But with the change of production conditions that accompanies the onset of a crisis, the possibility of acquiring these revenues in the customary sums disappears. With the onset of a crisis, we clearly see the inadaptability of these detached social forms of things, and particularly of the different forms of non-labour revenues, to the conditions of the production process. In the conditions of a crisis, ‘The fixed charges - interest, rent - which were based on the anticipation of a constant rate of profit and exploitation of labour, remain the same and in part cannot be paid’)^M The crisis puts an end to the seeming autonomy of different forms of non-labour revenues. So long as the production process moves in unchanging conditions that are continuously repeated, it can appear that the separate revenues really are independent of each other and that their sum constitutes the value of the commodity. As we know however, these different and antithetical forms of revenue are in fact con­nected through the unity of the entire mass of social labour and the mass of value that it creates. In normal conditions, the connection of different reven­ues with the value of commodities, and their limitation as a result of this value, THE DEVELOPMENT OF CATEGORIES IN MARX’S ECONOMIC SYSTEM (1929) 813 is not detectable on the surface of phenomena.^{[1675] [1676] [1677] [1678] But a crisis, which changes the general conditions of production and thus the conditions for the formation of value and surplus value, reveals the interconnectedness of all incomes and their subordination to the law of value. ‘It is crises that put an end to this appar­ent independence of the various elements into which the price of production dissolves and which it continually reproduces’.^6}

The distributive relations of capitalist society, which, in Marx’s words, are merely the other side of the production relations, form the basis for the appear­ance of a contradiction between production and consumption. The antagonistic relations of distribution ‘reduce the consumption of the vast majority of society to a minimum level, only capable of varying within more or less narrow limits’. Consequently, ‘the more labour productivity develops, the more it comes into conflict with the narrow basis upon which consumption rests'.i8⁷ On the one hand, a characteristic feature of capitalist society is precisely the separation of production from consumption and the antithesis between them: on the other hand, the unity of these two moments is forcibly restored in a crisis.188

Crises reveal with particular clarity the character of capitalist society as a unity of opposites. If capitalist society did not constitute a system of detached and relatively autonomous production relations between people and social forms of things - a system replete with the greatest contradictions - crises could not occur. On the other hand, however, these same crises reveal the character of this system as a unity and display the subordination of all the detached elements to its single regulating law of value. Crises temporarily re-establish equilibrium, but only in order to create the basis for a wider development and intensification of capitalism’s inherent contradictions. The conditions are increasingly created, therefore, for the onset of a grandiose crisis that destroys the very system of production relations in capitalist society and makes necessary the transition from the capitalist form of economy to the socialist one.

9 Conclusion

The development of Marx’s theory through the three volumes of Capital can be seen as a clear example of the application to political economy of the dialectical law of the unity of opposites. Crossing from one form of production relations to another, Marx shows the process of their gradually increasing complexity, of the gradual appearance of qualitatively new forms that are antithetical to the previous forms, and the process of their gradual detachment and alienation. Parallel with the appearance of contradictions within a group of phenomena that constitute a unity, these detached forms are all the more closely bound together due to the material unity of the entire production process. Forms that are antithetical and detached from each other preserve their unity. The fundamental concept, upon which Marx builds his entire system, is the concept of a determinate mass of social labour and the value it creates; this mass of value constitutes the general frame within whose limits the entire system of capitalist economy moves. Within this mass of value, a mass of surplus value becomes detached and in turn constitutes the framework within whose limits all the forms of non-labour revenues move. Considering all the social forms of things as variations of the form of a single mass of value, or a single mass of social labour, Marx discloses the internal law that unites them; he destroys the external independence and isolation of separate economic phenomena, considering them as subordinate parts and forms of a single process of the movement of social labour.

The external autonomy and ‘alienation’ of all economic phenomena in cap­italist society has its basic cause in the anarchic and unorganised character of the latter, in the dissolution of society into a number of partial and ‘inde­pendent' undertakings that find themselves in a relation of ‘reciprocal aliena­tion' from one another.^{[1679] [1680] This relation of mutual alienation between people finds its expression in the whole of economic life, in which the ‘appearance of strangeness' prevails.^0 The production relations between people are reified and fastened to the material elements of production, being alienated from human labour itself and from one another and taking on an irrational and estranged form. It is precisely in this external form that they are understood by the capitalists themselves and by vulgar economists.}

The classical school had already cleared a path for revealing a single dynamic and fluid process of the development of people's production relations behind the social forms of things.

It is the great merit of classical economics to have dissolved this false appearance and deception, this autonomization and ossification (Verselb- standigung undVerknocherung) of the different social elements of wealth vis-a-vis one another, this personification of things and reification of the relations of production, this religion of everyday life, by reducing interest to a part of profit and rent to the surplus above the average profit, so that they both coincide in surplus-value; by presenting the circulation process as simply a metamorphosis of forms, and finally in the immediate pro­cess of production reducing the value and surplus-value of commodities to labour.^{[1681] [1682] [1683] [1684]}

According to Marx, the classics destroyed the detachment of the different forms both of non-labour income and of capital and revealed in labour the source of value and surplus value. However, apart from the fact that the classics did not fully resolve this problem, only outlining the way to a solution, their method suffered from the following essential deficiency: the classics attemp­ted, with the help of analysis, to reduce the detachment and alienation of forms of wealth from one another to their internal unity - in the final analysis, to labour. But the classical school was limited by this analytical reduction and did not take the reverse synthetic route; it did not show how different forms arise from unity, gradually separating and becoming externally independent of one another; it did not show us the process of the gradual development and formation of forms, the process of the ‘genesis’ of forms.19² Since the classics could not move from unity to the variation of forms on the surface of phenom­ena, when explaining the latter they often fell themselves into vulgar, fetishistic notions, resulting in the mixing up of the labour point of view and the vulgar point of view in the system of the classics.

Marx managed not only to uncover the unity lying at the basis of contra­dictory phenomena but also to trace the entire process of the genesis of forms, which leads to differentiation within unity and the appearance within it of antithetical forms. Marx considered the social forms of things, which appear externally to be autonomous and alien to one another, to be ‘the estranged form of appearance of economic relations’.^³ Marx traces the process of the gradu­ally increasing complexity of the reification of production relations between people: ‘The relations of production become objectified and acquire an inde­pendent existence (Verselbstandigung) in relation to the agents of produc- tion'.i9⁴ There occurs a mutual detachment of production relations, which are now bound up with the various material elements of the process of produc­tion.^{[1685] [1686] The further the differentiation of society proceeds, with its stratifica­tion into different classes and groups, the more complex become the produc­tion relations between them, the more detached from one another are the dif­ferent spheres of the process of social production, the more fetishised are social relations, and the more concealed is the internal law on the basis of which they move:}

The actual production process, as the unity of the immediate produc­tion process and the process of circulation, produces new configurations in which the threads of the inner connection get more and more lost, the relations of production becoming independent of one another (sich gegeneinander verselbstandigen) and the components of value ossifying (sich gegeneinander verknochern) into independent forms.19⁶

The vulgar economists confined themselves to consideration of economic phe­nomena in their reified, detached and isolated form; this means that they also confined themselves to considering the surface of phenomena, to investiga­tion of the ‘appearance’ of phenomena. In contrast to them, Marx wants to uncover the ‘internal’ law of the phenomena. For that purpose he deprives economic phenomena of their seeming external autonomy, considering them in their internal connection with one another as parts of the single process of social production. From this point of view, the interaction between them already has the character not of an interaction between detached phenomena that are alien to one another; it is already a case of their interaction within the limits of a single process, in relation to which they are only externally detached parts and forms. They already emerge not as ‘detached’ from one another, but as the parts of a single production process that have ‘become detached; not as ‘alien' to one another, but as the ‘alienated' production relations between people and the social forms of things. And this is precisely why they already emerge not as indifferent to one another, but instead as simultaneously con­nected with one another by a relation of unity and a relation of antithesis. In Marx’s words, the vulgar economists consider ‘the different forms of surplus value and the forms of capitalist production not as alienated [entfremdet], but as alien [ Jremd] and indifferent forms, merely different from one another but not antagonistic to one another’.^{[1687] [1688] This is precisely why economic phenom­ena appear as the detached and alienated parts of a single process; they are not indifferent to one another but find themselves in a condition of contradiction and struggle with one another. This struggle of the different opposing and con­tradictory elements of capitalist economy, finding their highest expression in the struggle between the classes of capitalists and workers, prepares the ground for a real ‘removal’ of the alienated and detached forms of social life and for a genuine revelation of the unity that lies at their basis. The more the power of ‘alienated’ labour (capital) over living labour grows, the more the conditions are created for the elimination of this alienation. It is precisely because capital develops the powerful productive forces of labour, which can no longer operate within the limits of capitalist production relations, that it also prepares its own end:}

Capital shows itself more and more to be a social power, with the capit­alist as its functionary - a power that no longer stands in any possible kind of relationship to what the work of one particular individual can create, but an alienated social power which has gained an autonomous position (entJremdete, verselbstandigte gesellschaJtliche Macht) and con­fronts society as a thing, and as the power that the capitalist has through this thing. The contradiction between the general social power into which capital has developed and the private power of the individual capitalists over these social conditions of production develops ever more blatantly while this development also contains the solution to this situation, in that it simultaneously raises the conditions of production into general, com­munal, social conditions of production.^⁸

Marx thinks of the social revolution as the destruction of the ‘alienated’ and ‘detached’ forms of production relations between people.