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Marx's Mercantilism?

D. L. Jacobs

4 November 2023

The discussion of central bank reserve shares has occupied the Left’s attention recently. Conflict between nation-states has accelerated the demand for alternative financial systems to avoid sanctions and dollar dependence. While much has been said and written about the meaning of this change and predictions of where it is going, the basic categories that are used are accepted as given. This is rather bizarre given that capitalism is not a thing, but a crisis manifesting through the interrelation of social forms (a totality). Consequently, even seemingly innocuous and simple categories like money and credit find their truth only in the untruth of the whole. These questions long ago occupied political economy and its greatest critic, Karl Marx. The Third Estate had emancipated itself with the science of political economy and its “gravedigger,” the proletariat, had politicized the same ideology in its struggle to realize and overthrow bourgeois society. Consequently, Marx did not seek to “build on” political economy but rather, give the final chapter to political economy altogether. This would mean none other than the overthrow of political economy altogether. For only this would be the only appropriate science for the “the last class.”

Since that heroic attempt, the Left, in both its Marxist and “post-Marxist” forms, has comfortably fallen back not only on tailing major capitalist parties, but adopting a “radical” veneer to cover its rather banal social analysis. Rosa Luxemburg felt that it was the “essence of money” that characterized “precisely one of the greatest of Marx’s discoveries.” It would be rather a shame if we fell down on this point.

Thus, before we ask what bank reserves are – let alone central bank reserves- we should ask something more simple. What is money and why should the Left care?


Money can perhaps be traced back to the early beginnings of civilization. Astute historians and anthropologists have debated whether money emerged first through barter or through early forms of gifting and IOU’s.[i] The simple answer to the debate would be to ask: what came first? Barter or gifting? But this would not get at what is primary. What came first may be transformed later, turned into something derivative.

John Bellers, the “champion of the poor,” likened money to a “pledge” in modern society. What had earned this? While John Locke had summed up the ends of the revolt of the Third Estate by grounding society in the first property of labor, he ultimately tied the constitution of bourgeois social relations to the non-perishable character of commodity money (e.g., gold).[ii] This was adequate consciousness for his time. It “was consistent with the rudimentary stage of bourgeois production...The sphere of commodity circulation was the strictly bourgeois economic sphere at that time.”

Adam Smith, as the consciousness of the succeeding Manufacturing period, could sublimely reflect on the social cooperation embodied in the most common goods. Smith criticized Locke as a mercantilist. For a radical bourgeois thinker like Adam Smith, the essence of the exchange of commodities was the cooperation of labor. Humans might have a “disposition to truck, barter and exchange,” but only in bourgeois society does exchange become a form of a social relation, of labor. The “real price” of everything had revealed itself in the developing self-consciousness of bourgeois society as labor. The driving principle of development in Smith’s time, the division of labor, meant that that market extended through ever innumerable modes of cooperation. Money merely facilitated the cooperation, growing with the extension of the market. To make money primary was not just wrong for Smith but offensive to the cooperative spirit. No wonder the young Marx and Engels had described Smith as the “Luther” of Political Economy- he revealed the human element in the sphere that was long castigated as usurious. In this sense, Smith had already given a dialectical unfolding of labor.

Under the bourgeois property of labor, money became a force of production. By allowing individuals to meet their needs through the most particular specialization, the possibilities of production truly opened up. The quality of money as quantitative is truly infinite. We can understand why Marx would say that “[a]mong the ancients, we discover no single enquiry as to which form of landed property, etc., is the most productive, which creates maximum wealth.” There was no means “among the ancients” to represent possibility per se. When one works for money, they do not simply produce for explicit ends but those still coming into being or not even yet unknown. This was the imagination behind production for production’s sake.

The unfolding of Marx’s famous starting point, that bourgeois society appears as “an immense accumulation of commodities,” is the standpoint of self-estrangement. Like the “mighty thinker,” Hegel, Marx proceeds from the “the simplest social form in which the product of labour presents itself in contemporary society.” This was the commodity. However, unlike Hegel’s epigones, Marx long ago deeply considered what it meant that for Hegel, “the science was not something received, but something in the process of becoming, to whose uttermost periphery his own intellectual heart’s blood was pulsating[.]” Something had changed which made it impossible for Hegel’s followers to maintain the same standpoint. Marx had to ask, “how do we now stand with regards the Hegelian dialectic?”

For Hegel, the self-movement of Thought over the course of an account follows from the inner negativity of form itself; the very finiteness of determination is enough to point beyond itself. Dialectic was self-transformation through self-correction.[iii] A similar movement happens in Marx’s Capital, but with a historically specific “twist.” The inadequacy of the categories of political economy that drives the dialectic of capital is the inadequacy of bourgeois society to industrial production. It is a self-undermining repetition of historical moments. This was not a clever idea on the part of Marx but followed from the very inner struggle of the proletariat.

Marx’s 1844 manuscripts put into dialogue how “theological criticism... twisted into a theological caricature,” with the crisis of political economy. Adam Smith himself had already given a critique of political economy, an account of why and how it came into being, and its telos. But the crisis that had been brewing since Ricardo’s time had stirred the mouthpieces of the proletarian socialist movement to extend Smith’s account up to the present in order to polemicize against the capitalist class as usurping the rights of labor. When Marx writes that the adequate approach to estranged labor – capital – is not “to go back to a fictitious primordial condition as the political economist does...[but] proceed from an actual economic fact,” he is reflecting on the impossibility of maintaining Smith’s dialectic as it was intended. For Smith’s approach was already tried by Proudhon and the Ricardian Socialists, to explain the oppression of the proletariat. After all, if Smith taught us that the division of labor was the principle to the extension of money, then it necessarily followed that the accumulation of money that employed the helpless workers was nothing but their very cooperation, stolen away. They arrived at the necessary misrecognition that capital was a fiction, violating the rights of labor.

Marx’s insight into the self-contradiction of labor followed from this very politicization of this contradiction in thought, in the crisis of political economy.[iv] It signaled both the perfecting and impossibility of bourgeois society. Thus, “what in economic terms may be formally incorrect, may all the same be correct from the point of view of world history.” Marx “materialist dialectic” meant following through on this dialectic of misrecognition, for it was through such forms that the proletariat had also organized itself as a possible subject-object of history.[v] Indeed, the accumulation of money was the worker’s past cooperation and yet, it confronted them, necessarily, as an alien force over and above them.

When Marx develops the commodity in Capital, it is through the self-contradiction of the dialectic. The self-estranged position is preserved in the synthesis of the categories of political economy; a sort of negative sublation. This contradiction is not immediate but rather, has to be developed out of the whole. In order to make sense of Marx’s view of money, one cannot pull a passage out of Chapter 3 of Volume 1 of Capital (entitled “Money”), any more than one can pull a sentence out of Hegel’s Logic to explain what a “true” universal means. This would abstract from the totality of the account, falsifying the intention. Rather, it makes sense altogether.

The endless debate about the “labor theory of value” has primed readers of Capital to focus on the content in the equation “x commodity A = y commodity B” – that is, value.[vi] This sometimes skips over how this comes to be. A commodity is not a thing but a social relation. For a product to be a commodity, it must relate to other commodities. But to relate to commodities, a product must already be a commodity.

The equalizing character of labor was already described by plenty of bourgeois radicals, but what Marx sought to demonstrate was how the cooperative character of labor manifested for the proletariat, the “dissolution” of bourgeois society. The contradictory position of the proletariat was that it was simultaneously seeking to overthrow bourgeois society and hold it together. “Class society” was this contradiction projected on the night sky. What was new with Marx, was not that commodity owners exchange their labor, but that the form by which embodied activity became abstract human labor is achieved through a contradiction. If a subject could become conscious of how and why it was led to demand – that the very intelligibility was formed through contradiction – the issue could potentially be overcome.

This can be drawn out from the rather innocuous form, x commodity A = y commodity B. When we say the judgement out loud, “x commodity A is equal to y commodity B,” the copula (“is”) lets us know that commodity A has becomeequal to commodity B. This not immediately explicit because the relation manifests as a definite quantity and this is why value gets immediately identified with price.[vii] Really, it involves two distinct forms: the relative value (commodity A) is expressed through the equivalent value (commodity B). Note, however this means that, “y commodity B is equal to x commodity A,” is not the same as the converse.

Stop! What is this Hegelian madness?

For Marx, the identity formed in exchange exhibited a “polar” character: one side has “direct and universal exchangeability,” the other side “the absence of direct exchangeability.” Such a polarity was absent in Smith’s time because society did not confront its members with a means of replacing them. It was adequate consciousness for his time. The “exoteric” and “esoteric” Smith could find a path to the social totality whether he started from labor (Book I) or the market (Book II). “The interior of the commodity as a whole does not yet appear [to Smith] as having been seized and penetrated by contradiction.” The necessity for Marx to distinguish the “relative-form” from the “equivalent-form,” followed from the crisis of the very cooperation Smith had first articulated. It seems especially real to the workers who face the absurdity of superfluous labor alongside superfluous money.

Money, which is supposed to emerge as a means to solve the double coincidence of wants, here emerges in order to allow every commodity to be what it desires to be. The price, however, is that the commodity must have a price or give itself to universal equivalent. This does not solve the contradiction but rather raises it to a higher level, a higher fetish. Sociality, as such, seems to be a property of a single commodity against all others. This can be taken away from any commodity, as the unemployed have learned. Social cooperation becomes reduced to abstract human labor. We thus, have arrived at the “real price” being money.

It has been suggested to some that the value-form is a consequence of a specific commodity (“money”) being the go-between all the rest of the commodities. In other words, a strict bilateral exchange ought to side-step the fetish of the value-form But as Marx wrote to Engels in 1867, the “whole secret of the money form” was to be found in the “the simplest form of a commodity, in which its value is not yet expressed in its relation to all other commodities but only as something differentiated from its own natural form[.]” The relative and equivalent forms are opposed but refer to the same content. The seemingly indirect exchange – or even what some refer to today as the “non-neutrality” of money- is a product of the self-contradiction.

Thus, contained in the simple identity of price under capitalist production is the disintegration of the very same content it is supposed to express. The Left, today, falls to either side of the contradiction through either blinkered acceptance or crass dismissal. On the one hand, when the Left raises the specters of the falling rate of profit or the end of dollar dominance, it uncritically adopts these very categories in order to gleefully “read the tea leaves” of the end of the ruling class. On the other hand, money is denounced as the “root of all evil” and financialization denounced as a malicious swindle. That these are not merely economic categories but “forms of existence and conditions of existence” – of a society in crisis – means that any project of emancipation worth its name would have to consider how these categories manifest themselves in practice and could be met with revolutionary criticism.

To help clarify this self-undermining dynamic, we will discuss the phrase, “capitalist mode of production,” in the next installment.


[i] For example, see David Graeber, 2011, Debt: The First 5,000 Years, Melville House; Reprint edition (November 27, 2012). [ii] See John Locke, 1690, “CHAP. V. Of Property,” Second Treatise on Government, paragraphs 46-48. [iii] This is why Hegel praises Kant, despite the limitations of his exposition, for “[rating the] dialectic higher” than the received wisdom of it as a method for a thinker correcting their personal deficiency. Kant showed “the objectivity of the illusion and the necessity of the contradiction which belongs to the nature of thought determinations” (Science of Logic, § 68). In other words, the self-correction (“dialectic”) is not just the thinker approximating reality but it is the development of reality itself. [iv] “As the first criticism of any science is necessarily influenced by the premises of the science it is fighting against, so Proudhon's treatise Qu'est-ce que la propriété? is the criticism of political economy from the standpoint of political economy. — We need not go more deeply into the juridical part of the book, which criticizes law from the standpoint of law, for our main interest is the criticism of political economy. — Proudhon's treatise will therefore be scientifically superseded by a criticism of political economy, including Proudhon's conception of political economy. This work became possible only owing to the work of Proudhon himself, just as Proudhon's criticism has as its premise the criticism of the mercantile system by the Physiocrats, Adam Smith's criticism of the Physiocrats, Ricardo's criticism of Adam Smith, and the works of Fourier and Saint-Simon. All treatises on political economy take private property for granted. This basic premise is for them an incontestable fact to which they devote no further investigation, indeed a fact which is spoken about only "accidentellement'', as Say naively admits. But Proudhon makes a critical investigation — the first resolute, ruthless, and at the same time scientific investigation — of the basis of political economy, private property. This is the great scientific advance he made, an advance which revolutionizes political economy and for the first time makes a real science of political economy possible. Proudhon's treatise Qu'est-ce que la propriété? is as important for modern political economy as Sieyês' work Qu'est-ce que le tiers état? for modern politics.” Karl Marx and Friedrich Engels, Chapter IV: “‘Critical Criticism’ As the Tranquillity of Knowledge, Or ‘Critical Criticism’ As Herr Edgar,” in The Holy Family (1845). [v]The transcendence of self-estrangement follows the same course as self-estrangement.” [vii] What appears is a “jelly” of value but the sum of jellies is not equivalent to the jelly substance itself.

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