Capital, Volume I

''Capital. A Critique of Political Economy. Volume I: The Process of Production of Capital'' (german: Das Kapital. Kritik der politischen Ökonomie Erster Band. Buch I: Der Produktionsprocess des Kapitals) is the first of three treatises that make up ''Das Kapital'', a critique of political economy by the German philosopher and economist Karl Marx. First published on 14 September 1867, Volume I was the product of a decade of research and redrafting, and is the only part of ''Das Kapital'' to be completed during Marx's life. It focuses on the aspect of capitalism that Marx refers to as the capitalist mode of production, or the way in which capitalism organizes society to produce goods and services.

The first two parts of the work deal with the fundamentals of classical economics, including the nature of value, money, and commodities. In these sections, Marx defends and expands upon the labor theory of value as advanced by Adam Smith and David Ricardo. Starting with the next three parts, the focus of Volume I shifts to surplus value (the value of a finished commodity minus the cost of production), which he divides into absolute and relative forms. Marx argues that the relations of production specific to capitalism allow capital owners to accumulate more relative surplus value by material improvements to the means of production, thus driving the industrial revolution. But for Marx, not only does the extraction of surplus value motivate economic growth, it is also the source of class conflict between workers and the owners of capital. Parts Four, Five, and Six discuss how workers struggle with capital owners over control of the surplus value they produce, punctuated with examples of the horrors of wage slavery. Moreover, Marx argues that the drive to accumulate more capital creates contradictions within capitalism such as technological unemployment, various inefficiencies, and crises of overproduction. The penultimate part explains how capitalist systems sustain (or " reproduce") themselves once they have become established. Throughout the work, Marx places capitalism in a historically specific context, considering it not as an abstract ideal, but rather as the result of concrete historical developments. This is the special focus on the final part, which argues that capitalism was begun by the violent expropriation of property by the future capitalist class, a process Marx names "primitive accumulation."

In Volume I of ''Kapital'', Marx makes use of a variety of logical, historical, literary, and other strategies to illustrate his points. His primary analytical tool is historical materialism, which applies the Hegelian method of immanent critique to the material basis of societies. As such, Volume I includes copious amounts of historical data and concrete examples from the industrial societies of the mid-nineteenth century, especially the United Kingdom.

Within Marx's lifetime, he completed three editions of Volume I: the first two in German, the last in French. A third German edition, which was still in progress at the time of his death, was finished and published by Friedrich Engels, value, exchange and the genesis of money. As Marx writes, " ginnings are always difficult in all sciences. .. e section that contains the analysis of commodities, will, therefore present the greatest difficulty". The modern reader is often perplexed about Marx going on about "one coat is equal to twenty yards of linen". Professor John Kenneth Galbraith reminds us that "the purchase of a coat by an average citizen was an action comparable in modern times to the purchase of an automobile or even a house".

Chapter 1: The Commodity

= Section 1. The Two Factors of the Commodity

=
Marx says a commodity is a use-value and also an exchange-value. He explains that as a use-value the commodity is something that meets a human want or need of any kind, i.e. it is a useful thing. The use-value of the commodity is determined by how useful the commodity is. However, the actual use-value is immeasurable. He explains that use-value can only be determined "in use or consumption". After determining the commodity as being a use-value, Marx explains that a commodity is also an exchange-value. He explains this as the quantity of other commodities that it will exchange for. Marx gives the example of corn and iron. No matter their relationship, there will always be an equation where a certain amount of corn will exchange for a certain amount of iron. He sets up this example to say that all commodities are in essence parallel in that they can always be exchanged for certain quantities of other commodities. He also explains that one cannot determine the exchange-value of the commodity simply by looking at it or examining its natural qualities. The exchange-value is not material, but it is instead a measure made by humans. In order to determine the exchange-value, one must see the commodity being exchanged with other commodities. Marx explains that while these two aspects of commodities are separate, at the same time they are also connected in that one cannot be discussed without the other. He explains that while the use-value of something can only change in quality, the exchange-value can only change in quantity.

Marx then goes on to explain that the exchange-value of a commodity is merely an expression of its value. Value is what connects all commodities so that they can all be exchanged with each other. The value of a commodity is determined by its socially necessary labour time, defined as "the labour time required to produce any use-value under the conditions of production, normal for a given society and with the average degree of skill and intensity of labour prevalent in that society". Therefore, Marx explains, the value of a commodity does not stay constant as it advances or it varies in labour productivity which may occur for many reasons. However, value does not mean anything unless it conjoins back to use-value. If a commodity is produced and no one wants it or it has no use, then "the labour does not count as labour" and therefore it has no value. He also says that one can produce use-value without being a commodity. If one produces something solely for his own benefit or need, he has produced use-value, but no commodity. Value can only be derived when the commodity has use-value for others. Marx calls this social use-value. He writes all of this to explain that all aspects of the commodity (use-value, exchange-value and value) are all separate from each other, but they are also essentially connected to each other.

= Section 2. The Dual Character of the Labour Embodied in Commodities

=
In this section, Marx discusses the relationship between labour and value. He states that if there is a change in the quantity of labour expended to produce an article, the value of the article will change. This is a direct correlation. Marx gives as an example the value of linen versus thread to explain the worth of each commodity in a capitalist society. Linen is hypothetically twice as valuable as thread because more socially necessary labour time was used to create it. Use-value of every commodity is produced by useful labour. Use-value measures the actual usefulness of a commodity whereas value is a measurement of exchange value. Objectively speaking, linen and thread have some value. Different forms of labour create different kinds of use-values. The value of the different use-values created by different types of labor can be compared because both are expenditures of human labour. One coat and 20 yards of linen take the same amount of socially necessary labour time to make so they have the same value. As we have expected in the production of the commodities, it lessen the capacity to create a high value of products.

= Section 3. The Value-Form or Exchange-Value

=

(a) The Simple, Isolated, or Accidental Form of Value

In this section, Marx explains that commodities come in double form, namely natural form and value-form. We do not know commodities' values until we know how much human labor was put in it. Commodities are traded for one another after their values are decided socially; then, there is value-relation which lets us trade between different kind of commodities. Marx explains value without using money. He uses 20 yards of linen and a coat to show the value of each other (20 yards of linen = 1 coat, or 20 yards of linen are worth 1 coat). The statement "20 yards of linen are worth 1 coat" label two forms of value. The first form, the relative form of value, is the commodity that comes first in the statement (the 20 yards of linen in the example). The second form, the equivalent form of value, is the commodity that comes second in the statement (the 1 coat in the example). He adds that comparing 20 yards of linen to itself (20 yards of linen = 20 yards of linen, or 20 yards of linen are worth 20 yards of linen) is meaningless because there is no expression of value. Linen is an object of utility whose value cannot be determined until it is compared to another commodity. Determining the value of a commodity depends on its position in the expression of comparative exchange value.

(b) The Total or Expanded Form of Value

Marx begins this section with an equation for the expanded form of value in which "z commodity A = u commodity B or = v commodity C or = w commodity D or = x commodity E or = etc." and where the lower case letters (z, u, v, w, and x) represent quantities of a commodity and upper case letters (A, B, C, D, and E) represent specific commodities so that an example of this could be: "20 yards of linen = 1 coat or = 10 lb. tea or = 40 lb. coffee or = 1 quarter of corn or = 2 ounces of gold or = ton of iron or = etc." Marx explains that with this example of the expanded form of value the linen "is now expressed in terms of innumerable other members of the world of commodities. Every other commodity now becomes a mirror of linen's value". At this point, the particular use-value of linen becomes unimportant, but rather it is the magnitude of value (determined by socially necessary labor time) possessed in a quantity of linen which determines its exchange with other commodities. This chain of particular kinds (different commodities) of values is endless as it contains every commodity and changes constantly as new commodities come into being.

(c) The General Form of Value

Marx begins this section with the table:

Marx then divides this subset of section 3 into three parts:

(d) The Money Form

Here, Marx illustrates the shift to money form. Universal equivalent form or universal exchangeability has caused gold to take the place of linen in the socially accepted customs of exchange. Once it had reached a set value in the world of commodities, gold became the money commodity. Money form is distinct from sections A, B, and C.

Now that gold has a relative value against a commodity (such as linen), it can attain price form as Marx states:

This illustrates the application of price form as a universal equivalent. Marx concludes this section by pointing out that "the simple commodity-form is therefore the germ of the money-form". The simplified application of this idea is then illustrated as such:

= Section 4. The Fetishism of the Commodity and Its Secret

=
Marx's inquiry in this section focuses on the nature of the commodity, apart from its basic use-value. In other words, why does the commodity appear to have an exchange-value as if it was an intrinsic characteristic of the commodity instead of a measurement of the homogenous human labor spent to do the commodity? Marx explains that this sort of fetishism, which he attributes to a thing a characteristic when it is actually a social product, originates in the fact that under a commodity based society the social labour, the social relations between producers and their mutual interdependence, solely manifest in the market in the process of exchange. Therefore, the value of the commodity is determined independently from private producers so it seems that it is the market which determines the value apparently based on a characteristic of the commodity; it seems as if there are relations between commodities instead of relations between producers.

Marx also explains that due to the historical circumstances of capitalist society the values of commodities are usually studied by political economists in their most advanced form, i.e. money. These economists see the value of the commodity as something metaphysically autonomous from the social labor that is the actual determinant of value. Marx calls this fetishism—the process whereby the society that originally generated an idea eventually and through the distance of time forgets that the idea is actually a social and therefore all-too-human product. This society will no longer look beneath the veneer of the idea (in this case the value of commodities) as it currently exists. The society will simply take the idea as a natural and/or God-given inevitability that they are powerless to alter it.

Marx compares this fetishism to the manufacturing of religious belief. He argues that people initially create a deity to fulfill whatever desire or need they have in present circumstances, but then these products of the human brain appear as autonomous figures endowed with a life of their own and enter into a relations both with each other and with the human race. Similarly, commodities only enter into relation with each other through exchange which is a purely social phenomenon. Before that, they are simply useful items, but not commodities. Value itself cannot come from use-value because there is no way to compare the usefulness of an item; there are simply too many potential functions.

Once in exchange, commodities' values are determined by the amount of socially useful labor-time put into them because labor can be generalized. For example, it takes longer to mine diamonds than it does to dig quartz, therefore diamonds are worth more. Fetishism within capitalism occurs once labor has been socially divided and centrally coordinated and the worker no longer owns the means of production. They no longer have access to the knowledge of how much labor went into a product because they no longer control its distribution. The only obvious determinant of value remaining to the mass of people is the value that was assigned in the past. Thus, the value of a commodity seems to arise from a mystical property inherent to it, rather than from labor-time, the actual determinant of value.

Chapter 2: Exchange

In this chapter, Marx explains the social and private characteristics of the process of exchange. According to Marx, owners of commodities must recognize one another as owners of commodities which embody value. He explains exchange not merely as a swapping of items, but as a contract between the two. It is this exchange which also allows the commodity in question to realize its exchange value and he explains that the realization of exchange value always precedes that of use value because one must obtain the item in question before its actual utility is realized. Furthermore, Marx explains that the use value in question can only be realized by he who purchases the commodity whereas he who is selling a commodity must find no utility in the item, save the utility of its exchange value. Marx concludes the chapter with an abstraction about the necessitated advent of money wherever exchange takes place, starting between nations and gradually becoming more and more domestic. This money form which arises out of the necessity of liquidating exchange becomes the universal equivalent form which is set aside from all commodities as a mere measure of value, creating a money-commodities dualism.

Chapter 3: Money, or the Circulation of Commodities

= Section 1. The Measure of Values

=

(a) Functions of Metallic Money

In this chapter, Marx examines the functions of money commodities. According to Marx, the main function of money is to provide commodities with the medium for the expression of their values, i.e. labor time. The function of money as a measure of value serves only in an imaginary or ideal capacity. That is, the money that performs the functions of a measure of value is only imaginary because it is society that has given the money its value. For example, the value of one ton of iron is expressed by an imaginary quantity of the money commodity which contains the same amount of labor as the iron.

(b) Multiple Forms of Metallic Money

As a measure of value and a standard of price, money performs two functions. First, it is the measure of value as the social incarnation of human labour. Second, it serves as a standard of price as a quantity of metal with a fixed weight. As in any case, where quantities of the same denomination are to be measured the stability of the measurement is of the utmost importance. Hence, the less the unit of measurement is subject to variations, the better it fulfills its role. Metallic currency can only serve as a measure of value because it is itself a product of human labour.

Commodities with definite prices appear in this form: a commodity A = x gold; b commodity B = y gold; c commodity C = z gold, etc., where a, b, c represent definite quantities of the commodities A, B, C and x, y, z definite quantities of gold.

In spite of the varieties of commodities, their values become magnitudes of the same denomination, namely gold-magnitudes. Since these commodities are all magnitudes of gold, they are comparable and interchangeable.

(c) Price

Price is the money-name of the labor objectified in a commodity. Like the relative form of value in general, price expresses the value of a commodity by asserting that a given quantity of the equivalent is directly interchangeable. The price form implies both the exchangeability of commodities for money and the necessity of exchange. Gold serves as an ideal measure of value only because it has already established itself as the money commodity in the process of exchange.

= Section 2. The Means of Circulation

=

(a) The Metamorphosis of Commodities

In this section, Marx further examines the paradoxical nature of the exchange of commodities. The contradictions that exist within the process of exchange provide the structure for social metabolism. The process of social metabolism "transfers commodities from hands in which they are non-use-values to hands in which they are use-values". Commodities can only exist as values for a seller and use-values for a buyer. In order for a commodity to be both a value and a use-value, it must be produced for exchange. The process of exchange alienates the ordinary commodity when its antithesis (the money commodity) becomes involved. During exchange, the money commodity confronts the ordinary commodity disguising the true form of the ordinary commodity. Commodities as use-values and money as exchange-value are now on the opposite poles and exist as separate entities. In practice, gold or money functions as exchange-value while commodities function as use-values in the process of exchange. A commodity's existence is only validated through the form of money and money is only validated through the form of a commodity. This dualistic phenomenon involving money and commodities is directly related to Marx's concept of use-value and value.

; Commodity-Money-Commodity
: $C \to M \to C$
Marx examines the two metamorphoses of the commodity through sale and purchase. In this process, "as far as concerns its material content, the movement is C-C, the exchange of one commodity for another, the metabolic interaction of social labor, in whose result the process itself becomes extinguished".

; First metamorphosis of the commodity, or sale
: $C \to M$
In the process of sale, the value of a commodity which is measured by socially necessary labor-time is then measured by the universal equivalent, i.e. gold.

; The second or concluding metamorphosis of the commodity purchase
: $M \to C$
Through the process of purchase, all commodities lose their form by the universal alienator, i.e. money. Marx states that since "every commodity disappears when it becomes money", it is "impossible to tell from the money itself how it got into the hands of its possessor, or what article has been changed into it".

A purchase represents a sale, although they are two separate transformations. This process allows for the movement of commodities and the circulation of money.

(b) The Circulation of Money

The circulation of money is first initiated by the transformation of a commodity into money. The commodity is taken from its natural state and transformed into its monetary state. When this happens, the commodity "falls out of circulation into consumption". The previous commodity now in its monetary form replaces a new and different commodity continuing the circulation of money. In this process, money is the means for the movement and circulation of commodities. Money assumes the measure of value of a commodity, i.e. the socially necessary labor-time. The repetition of this process constantly removes commodities from their starting places, taking them out of the sphere of circulation. Money circulates in the sphere and fluctuates with the sum of all the commodities that co-exist within the sphere. The price of commodities, and thus the quantity of money in circulation, varies by three factors, namely "the movement of prices, the quantity of commodities in circulation, and the velocity of circulation of money".

(c) Coin and the Symbol of Value

Money takes the shape of a coin because of how it behaves in the sphere of circulation. Gold became the universal equivalent by the measurement of its weight in relation to commodities. This process was a job that belonged to the state. The problem with gold was that it wore down as it circulated from hand to hand so the state introduced new circulating media such as silver, copper and inconvertible paper money issued by the state itself as a representation of gold. Marx views money as a "symbolic existence" which haunts the sphere of circulation and arbitrarily measures the product of labor.

= Section 3. Money

=

(a) Hoarding

The exchange of money is a continuous flow of sales and purchase. Marx writes that " order to be able to buy without selling, nemust have previously sold without buying". This simple illustration demonstrates the essence of hoarding. In order to potentially buy without selling a commodity in your possession, you must have hoarded some degree of money in the past. Money becomes greatly desired due to potential purchasing power. If one has money, one can exchange it for commodities and vice versa. However, while satisfying this newly arisen fetish for gold, the hoard causes the hoarder to make personal sacrifices and explains its amorality "doing away all distinctions" by citing ''Timon of Athens'' by William Shakespeare.

(b) Means of Payment

In this section, Marx analyzes the relationship between debtor and creditor and exemplifies the idea of the transfer of debt. In relation to this, Marx discusses how the money-form has become a means of incremental payment for a service or purchase. He states that the "function of money as means of payment begins to spread out beyond the sphere of circulation of commodities. It becomes the universal material of contracts". Due to fixed payments and the like, debtors are forced to hoard money in preparation for these dates as Marx states: "While hoarding, as a distinct mode of acquiring riches, vanishes with the progress of civil society

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