How Things Become Money — Das Kapital

Commodities cannot walk to market, so Marx starts with their guardians. Each owner must treat the other as a private proprietor and part with his goods only by mutual consent. The contract that records the deal is only the reflex of an economic relation underneath it, and the people on the stage are its personifications. The goods themselves are born levellers and cynics, ready to swap body and soul with any other commodity, however repulsive. The owner has no use for his own goods. He brings them to market only to turn them into something he can use, so every commodity is a non-use-value to its owner and a use-value to everyone else, and all of them must change hands.

That sets a trap. Goods must prove they are useful to others before their labour counts as value, yet they must be realised as value before anyone can use them. Only the act of exchange shows whether the labour was useful. Each owner also wants two things at once: a private swap for what he needs, and a social swap at equal value for anything at all. Since every owner treats his own goods as the universal equivalent, no goods can play that part. Marx quotes Faust: in the beginning was the deed. The owners acted before they thought. Barter began at the edges of communities that held property in common, such as an ancient Indian community or a Peruvian Inca state. Once swaps were repeated, some goods were made for exchange, and use-value split from exchange-value.

Out of that traffic the other goods set one commodity apart. At first its role came and went, attaching itself to this good and then to that. Then it stuck, first to the chief article brought in from outside, or to the main wealth of the home community, such as cattle. Nomad peoples developed money first, since all their goods could be moved and they met foreign communities all the time. People have used slaves as money, but never land. That idea belongs to a developed bourgeois society, from the last third of the 17th century, and was first tried on a national scale in the French Revolution. As exchange broke out of local bounds, the role fell to the precious metals. Gold and silver are uniform, divisible at will and easy to join again. Gold also gains a second use-value on top of stopping teeth and making luxuries: its social function.

Marx then clears away old errors. Writers of the late 17th century had already shown that money is a commodity, but the difficulty is how and why a commodity becomes money. Others saw that gold is not money by nature and called its value imaginary, or money a mere symbol, as the 18th century liked to explain puzzling social forms by convention. Lawyers had pushed the same idea much earlier, serving kings who wanted the right to debase the coinage. In fact gold's value is set by the labour-time it costs, through barter at the mine, before it ever circulates as money. The illusion runs the other way. It seems that all goods price themselves in gold because gold is money, when gold became money because they did so. The steps vanish in the result. Gold and silver, fresh from the bowels of the earth, look like the direct incarnation of all human labour. Hence the magic of money. Marx closes on a plain verdict: the riddle of money is only the riddle of the commodity, now in its most glaring form.