Note: copied from facebook posts
https://political-economy.com/capital-karl-marx/
A couple days ago i shared a link so you could download Capital and read it for free. I'll put it in a comment if you missed it. I've casually read chapter one, and i assume you all did too. Of course you did, you guys are inquisitive and not content to just recycle third hand catch phrases from the last hundred something years. So, you're probably thinking "why am i reading this boring treatise on classical market economics by an old dead guy in a library with nothing better to do than read history and politico-economic discourse and then write about it from his own point of view?" The answer of course is that that's what scholars do; that's what half the country thinks is a waste of time. It's why facebook and twitter and wikipedia aren't valid sources of academic knowledge.
So, chapter one. What's a commodity?
It's a useful thing people make/produce specifically to trade for other useful things. That's a loaded definition, and chapter one presents a reasonably thorough explanation of how the concept of value is embedded inside a commodity. If it seems boring and pedantic, that's because it is; you have to define all of your terminology or else no one will understand what you're actually talking about. A pretzel doesn't just magically equal 3/5 of a roasted peanuts (that's a Steely Dan joke if you don't regularly read my album reviews).
It can be a little hard to really understand what we aren't talking about in chapter 1: no money, no different types of labor, no profit or loss, just the simple mechanism by which we determine the amount of different things being equivalent. Marx says that equivalence comes from human labor, whereas people before him said "i dunno." Not specialized labor like you're thinking about, but the abstract notion that there is an average time and energy required to complete any task, and that we can determine equivalences from the sum total of the labor involved. He uses weaving linen as an example.
He also uses that infamous word "bourgeois," but he uses it only in the contemporaneous context that his audience understands it to explain why it makes the whole thing really confusing.
Do you have questions about chapter 1? I might be able to answer them, or i might not. Please keep in mind that we are merely reading a book. Yes, it's a book that many people have used to justify killing each other, but so is the Bible, and so too are nonsense Beatles lyrics. The only purpose of this endeavor is to actually read it so that you can use the fact that you have actually read it as basis for your future feelings and opinions about Marxist theory, whatever they may be.
Marx is not simply a crazy guy in the woods like the unabomber. He is widely considered the inventor of modern sociology. Capital is by all definitions a scholarly text on economics (albeit cutting edge 1800s economics), whether you agree with his theories or not, and i believe in complete intellectual freedom. I will obviously weigh in with my own opinions, and you should too, but i do ask that you make some effort to keep them inside the scope of the actual book. It makes no difference whether you or i agree with Marx or not, only that we understand the subject matter. I can't stress this enough, you must let go of any preconceived notions and simply listen to another person express their ideas. If you want to participate, please do. If you want to just insult people, please don't. I like funny comments as much as anybody, but don't forget that this is exactly the "public service" and "publication" component us doctorate level scholars do, albeit in facebook rather than auditorium form (i just don't have a major university sponsoring me while i do it).
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Chapter 2 of Capital should kind of smack you in the forehead like you could have had a V8. You have to A) understand that people own their wares, and B) mutually agree to exchange them. You trade things that aren't valuable to you for things you want (aka are valuable to you) in proportions you both agree are equivalent.
There are some important points here. First, the value or equivalence of commodities is not magically apparent on the surface, it only comes into existence at the moment of trade, and each and every trade redefines those values. If you try to escape that exchange in some way, then there is no value of equivalence anymore. Second, money is itself a commodity, but it functions as a universal equivalent because everyone accepts the exchange of money as a commodity. The confusing part is that as soon as you accept this universal equivalent as money, you tend to forget all of the complex relationships that gave it comparative value in the first place. Third, you have to again remind yourself what we are not talking about. We aren't talking about the intricacies of haggling, bargaining, and negotiation. We are looking at a functioning system of trade after the labor/production is over.
That last distinction is important. We aren't promising to do work in the future, or guessing about the usefulness of the commodities at hand. That usefulness is constantly being evaluated in the process of exchange, and we the observers are not actively participating. The active participants load up the useful things they have but don't need, and head out to exchange them for different useful things with other people doing the same. That's "the economy" as far as this book is concerned at the moment.
I should also mention that we aren't really concerned with the end notes of each chapter. They serve as documentation of the ideas he is including or arguing about, but they don't really do much for the kind of naive reading we are doing. We aren't sitting around a table plotting world domination, or studying for a test. We might disagree with his descriptions or assumptions, but we have to remember that we're listening to Marx express ideas. We can't start debating those ideas until after we understand what he's trying to say.
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Chapter 3 begins the introduction to precious metals as the basis for monetary systems. We're getting close to our modern understanding, so it's easy to let your imagination run away with you. The important thing to keep in mind is that we imagine a "gold standard" for the equivalences of precious metals. We can use any such metal as money so long as its own value remains consistent to the value of gold, which is in turn based on the labour of obtaining it. The actual price of buying gold does not affect its status as a universal equivalent because that characteristic is based on units of weight. An ounce of gold is an ounce of gold no matter how much stuff you can trade for it.
All this stuff is, to my mind, basic economics. Certain aspects of it may be more or less understandable to you, but i think we can all mostly agree that it is a reasonable explanation of the historical development of Western Economics, or at the very least the things you were taught with regard to economics in a "common sense" kind of way.
It's easy to get carried away if you try to give a present day example, but i think i can do a reasonable job. Let's say i have way too many records that i don't want to listen to anymore, but i don't have any potatoes that i want to eat. I know from all my trips to the grocery store that i can buy a bag of potatoes for around $3, and i know plenty of people who would give me $3 for one of my records. In this ideal model of economics, i go sell a record to that guy for $3, then go buy a bag of potatoes for $3 and presto change-o, economy accomplished. Yes that's simplistic, but i think you'll agree that it's a tangible example of real world activity.
We can let our minds wander a little at this point. With regard to labor, it's easy to justify why used records are cheaper than new records, computers cost more than a bag of dirt, boiling up a pretzel isn't quite as costly as roasting peanuts, a day spent driving a bus isn't really that much different than a day spent entering receipts into a spreadsheet. We all have a mental checklist of things that are roughly equivalent and we exchange the results of that labor frequently enough to keep those relationships relatively stable. We might wake up to find that my potato/record exchange cost $4 or $2, but i would instinctively try to compensate because i haven't changed my mental equivalence between a record and a bag of potatoes; that would take several instances of failed exchanges to adjust. From an observer's standpoint, i'm still selling some quantity of records and using that money to buy some quantity of potatoes, or some other equivalent commodity. So long as there are people who buy my unwanted records, i will exchange them for things i do want in a similar fashion.
Got it? Good.
The rest of section 1 is a historical synopsis of the development of fiat currency. Regardless of your feelings about it, it has repeatedly happened throughout history and it's where we are today. So long as nobody jumps ship or tries to get too sneaky, it still works well.
When we continue reading we see that my example is exactly what Marx describes; his example is the weaver selling 20 yards of linen and using the money to buy a bible of equal price. We aren't reading anything into those specific items, by the way, the weaver is simply trading what he has for what he wants via money the same way i did in my example.
Continuing to read we see that Marx addresses exactly the same problem i raised. I'm looking at pages 136 and 137 in the pdf i shared with you. He talks about all those scenarios where the guy gets surprised by not being able to effectively trade, and points out that so long as he is able to make some trade for his wares the system is functioning properly. One bad day doesn't mean the system is broken. One day he might not get much, the next he might get more, such is life.
What follows is a lengthy description of the process of buying and selling commodities where each purchase removes a commodity while the money continues toward infinity, enabling further purchases. That continual drifting away only stops when someone "takes the money and runs," or less humorously has no intention of spending it. To put it bluntly, if you stop buying things, the economy dies.
The rest of section 2 is kind of an information dump, but it's easy to follow the progression from coins of gold/silver/etc. To paper money that represents only the circulating portion of exchange (the infinite chain of buying things), until finally we get the novel money (currency) issued by "the state" as an abstract representation of bullion. That fiat currency only exists inside the state itself for the obvious reason that anyone outside that state has no understanding of these funny coins and papers as representations of money. There is still a universal form of money at the highest level, but inside a particular community we can use technically worthless representations without any problem, so long as the amount of currency in circulation represents the sum cost of all commodities.
And now, on page 169, we get to hoarding. I don't want to drag this out, so hoarding money is simply not buying things you want. There are good reasons to do it and bad reasons to do it, but what follows for the rest of chapter 3 is a description of the growth of local hoards (think of banks in general), and the growth of credit and debt to such an extent that the whole system becomes unstable and wildly unpredictable save for the fact that when banks have way more money than normal it is obvious that the exchange of commodities is stagnating.
Hold on Bottle. This is all starting to sound like what the people who are somehow vehemently against Marxism are saying.
Well, you know, we're only on page 200 something of a 2,000 page multi-volume work. He could make a u-turn. He could dive into the empty swimming pool head first and not prove me right. I don't get the sense that the first 3 chapters are written in the form of sarcasm, but i'm also not opposed to the idea that i'm the one who has it all backward. He hasn't told us we're wrong for participating in common sense economic activity, but maybe i'm missing something. Maybe this is just a faulty bizarro copy of Capital and Marx really thought that manipulating currency streams to generate new forms of economic slavery was super awesome. Look at those schmucks making stuff and trading it for other stuff, what a bunch of losers.
Now, i'm not going to make any real predictions, i'm just commenting on reading the book. I am reading the book, and so far he has outlined classical economics, elaborated on the ways that people attempt to manipulate that system for unfair advantage, and given us clear examples of how that historically played out. It appears to be backward from what everyone claims Marxist theory to be, and actually coincides with what explicitly anti-Marxist talking points say we should be doing instead. He could be trolling us, and i'll have a nice hearty belly laugh if he is.
I'm going to take a break and give you all the chance to digest both the book and what i've said so far. I'll also find somewhere to compile it so you don't have to work as hard. If you're just now joining us, we're reading Capital by Karl Marx and i welcome you to read it too. Go find a copy, or scroll through my previous posts to find a link to it (just go to my feed and scroll down a ways). The only real danger is that we might learn something in the process.....
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Today is kind of a refresher course. I just want to outline what happens in the first 3 chapters of Capital. At a fundamental level, we humans barter, that is face to face exchange of commodities. Obviously, bartering can only work in a highly localized community, and it is an explicitly social activity. On top of this barter system, we superimpose the concept of a universal equivalent, aka money. Money is an intricate concept, both a commodity in its own right and an external measurement of comparative value, but we all understand it as a useful way to facilitate exchange over longer distances, between very different communities, in exactly the same social exchanges of commodities that constitute barter.
But, this is only one side of economic activity. There is a mirror image, so to speak. While one person trades a commodity for money then trades that money for other commodities, his counterpart trades money for a commodity then trades those commodities for money. We can use whatever terms we want for these two people, but "worker" and "merchant" seem the easiest to my mind. The really important part is that we distinguish between the two frames of reference: C-M-C and M-C-M. We might be participating in one or the other for any particular exchange, so we have to understand which one is taking place.
Similarly, there is a difference between the regulating of money as a commodity in its own right and using that money for its intended universal equivalence. For now though, we simply assume that a person is engaged in one or the other at any particular time.
You will also notice that Marx has a shall we say Bottle of Beef quality to his writing. You can tell there are things that make him mad, and ideas he thinks are stupid. I gloss over that stuff because it doesn't really change the theoretical model he is describing. He's mad about certain ways this system has been manipulated and our task is to understand why he thinks those things are terrible.
I've given you an example of how it might apply to my own life in a limited context. Though remedial, i think most of you can see how the C-M-C side of this model describes some basic principles we all accept. It may not represent your actual day to day life very well, but we are reading a book from the 19th century here in the 21st century. Maybe the closest modern day phenomenon is a theoretical "garage sale" based economy. People sell their unwanted stuff, take that money, and buy your unwanted stuff; old records, clothes, cookware, chicken waterers, toys, useful things being exchanged through the universal equivalent of our modern form of money. The overall prices are extremely small (much smaller than buying these items new) because the amount of work spent acquiring them is miniscule compared to making them in the first place. Swap meets and pawn shops might also be reasonable examples of finite commodity markets; the more useful or desirable an item, the more money we all expect to spend. Furthermore, if we all stop participating, then the pawn shop will go out of business.
Everybody happy so far? Questions? Things about the model that don't make sense, or things you completely disagree with? As i've said before, i think i understand it, he hasn't said anything illogical or false, it's a reasonable basic foundation for economic activity distilled from studying the history of Western civilizations. Still though, we should leave some time for it to percolate in our minds before going on to chapter 4.
