The Measure Of Values

The first chief function of money is to express the comparative value of commodities as the universal measure of value.

Money becomes the measure of commodities because all commodities are products of human labour. Money therefore is the measure of labour time.

The expression of the value of a commodity in gold — x commodity A = y money-commodity — is its money-form or price.

1 ton of iron = 2 ounces of gold expresses the value of iron to society. We do not need this equation to be linked in the chain of equations* that express the values of all other commodities because gold now has the character of money.

Money itself has no price. It is equated to itself as its own equivalent*.

The price or money-form of commodities is a purely ideal or mental form. These ideals are made perceptible by their equality with gold, a mental relation.

The value, or in other words, the quantity of human labour contained in a ton of iron, is expressed in a quantity of money that contains the same amount of labour as the iron.

As measure of Value money has two distinct functions:

1. It is the socially recognised incarnation of human labour as the standard of price

2. It converts the values of all commodities into prices which represent quantities of gold

A change in the value of gold does not, in any way, affect its function as a standard of price nor interfere with its functions as a measure of value.

The change affects all commodities simultaneously.

A general price inflation can be caused only by=

• a rise in their values — the value of money remaining constant or
• a fall in the value of money, the values of commodities remaining constant.

On the other hand, a general price deflation can result only, either from=

• a fall in the values of commodities — the value of money remaining constant — or
• a rise in the value of money, the values of commodities remaining constant.

By degrees there arises a discrepancy between=

• the current money-names of the various weights of the precious metals figuring as money, and
• the actual weights which those names originally represented.

This discrepancy is the result of historical causes, among which the chief are=

1. The importation of foreign money into an imperfectly developed community.

This happened in Rome in its early days, where gold and silver coins circulated at first as foreign commodities. The names of these foreign coins never coincide with those of the indigenous weights.

2. As wealth increases, the cheaper metal is replaced by more precious metals as the measure of value

Copper was replaced by silver, silver by gold.

3. The debasing of money carried on for centuries by kings made their money-names totally different from the original weights of the coins.

The prices, or quantities of gold, into which the values of commodities are ideally changed, are therefore now expressed in the names of coins. Hence, instead of saying= A quarter of wheat is worth an ounce of gold; we say, it is worth £3 17s. 10 1/2d.

In this way, commodities express by their prices how much they are worth, and money serves as money of account whenever it is a question of fixing the value of an article in its money-form.

The name of a thing is different from its qualities. I know nothing of a man named Jacob, other than his name.

Similarly, the names pound, dollar, franc, ducat, etc nean nothing.

Price is the money-name of the labour realised in a commodity. Hence the expression of the equivalence of a commodity with the sum of money constituting its price, is a tautology, just as in general the expression of the relative value of a commodity is a statement of the equivalence of two commodities.

But although price, being the exponent of the magnitude of a commodity’s value, is the exponent of its exchange-ratio with money, it does not follow that the exponent of this exchange-ratio is necessarily the exponent of the magnitude of the commodity’s value.

Suppose a certain labour is priced at=

• 1 quarter of wheat and
• £2 (nearly 1/2 oz. of gold).

£2 then is the money-representation of a quarter of wheat. If this is raised to £3, then the £3 will no longer represent a quarter of wheat, but will still represent the same labour.

If the productive power of labour remain constant, the same amount of social labour-time will still produce a quarter of wheat, regardless of the labor’s money-price.

This circumstance depends, neither on the will of the wheat producer, nor on that of the owners of other commodities.

From Labor ‘Magnitude of value’ into Money ‘Price form’

‘Magnitude of value’ is the connection between a product and the total labour-time of society required to produce it.

• As soon as magnitude of value is converted into price, this relation changes into the exchange-ratio between the product and money.

But this exchange-ratio may express either=

• labour or
• the quantity of gold deviating from that value (which may be parted with).

The resulting price-form creates an inherent quantitative incongruity between price and magnitude of value. This incongruity admirably adapts the arbitrary price-form.

The price-form, however, is incompatible with the quantitative incongruity between magnitude of value and price. Its value is not exactly the same as its money-price because it hides a qualitative inconsistency. This makes the money price not really express the value.

Abstract concepts such as conscience, honour, etc can be sold for commodities.

Hence, an object may have a price without having value. The price in this case is imaginary, like certain quantities in mathematics.

On the other hand, the imaginary price-form may sometimes conceal either a direct or indirect real value-relation. For instance, the price of uncultivated land has no value because no human labour has been incorporated in it.

Price, like relative value in general, expresses the value of a commodity (e.g., a ton of iron), by stating that a given quantity of the equivalent (e.g., an ounce of gold), is directly exchangeable for iron.

But it by no means states the converse, that iron is directly exchangeable for gold. In order, therefore, that a commodity may in practice act effectively as exchange-value, it must quit its bodily shape, must transform itself from mere imaginary into real gold, although to the commodity such transubstantiation may be more difficult than to the Hegelian “concept,” the transition from “necessity” to “freedom,” or to a lobster the casting of his shell, or to Saint Jerome the putting off of the old Adam. [15]

Though a commodity may, side by side with its actual form (iron, for instance), take in our imagination the form of gold, yet it cannot at one and the same time actually be both iron and gold. To fix its price, it suffices to equate it to gold in imagination.

But to enable it to render to its owner the service of a universal equivalent, it must be actually replaced by gold. If the owner of the iron were to go to the owner of some other commodity offered for exchange, and were to refer him to the price of the iron as proof that it was already money, he would get the same answer as St. Peter gave in heaven to Dante, when the latter recited the creed —

“Assai bene è trascorsa d’esta moneta già la lega e ’l peso, ma dimmi se tu l’hai ne la tua borsa.”

A price therefore implies:

• that a commodity is exchangeable for money
• that it must be so exchanged.

On the other hand, gold serves as an ideal measure of value, only because it has already, in the process of exchange, established itself as the money-commodity. Under the ideal measure of values there lurks the hard cash.