>>2237072Gold, as a commodity, has both a use-value in its physical properties (like being used in electronics or jewelry), and its exchange-value is determined by the socially necessary labor time (SNLT) required to produce it. But when gold becomes money, its role changes. It becomes the universal equivalent, representing the value of all other commodities.
Gold's value is initially necessary for it to serve as money. However, once gold is established as money, its symbolic role can take precedence, and it does. In practice, the symbolic representation (money) becomes detached from the underlying value (gold's SNLT). In modern economies, the symbolic function of money (even if originally based on gold) has overshadowed the material basis. This aligns with Marx's discussion of how money evolves and how capitalist systems can create forms of money that obscure the labor theory of value. In Marx's time, the gold standard was prevalent, so his analysis was based on that, but his analysis does not rely on it.
The primacy of the representational aspect of money over its material basis is a key aspect of Marx's critique of commodity fetishism. The value of gold as a commodity (SNLT) is real, but its role as money gives it a symbolic power that transcends its material value. This duality is important in understanding how capitalist economies function and how value is perceived socially. Marx would agree that, in practice, the symbolic role dominates under capitalism, but its historical material basis was necessary in the foundation for money’s social power.
This is not a contradiction in Marx, but a contradiction in capitalism. Capitalism’s value system appears self-sustaining, but the system’s stability is borrowed from the material world. Crises expose the fragility of the symbolic edifice, but underlying that is not the labor embedded in gold. The symbolic (money) cannot exist without the material (labor), but the labor here is not the labor in money, but the total socially necessary abstract labor. Gold’s value is the repressed foundation of a system that must deny its own basis to survive.
Gold's historic role is to provide a stable measure, even if market prices deviate. Marx's critique of abandoning the gold standard is not that its logically impossible, but that it is both irrational from the perspective of a capitalist wishing to maintain capitalist social relations and necessitated by the logic of Capital itself, as capital prioritizes the efficiency of profit over all else, all that is solid melts into air.
Gold’s position as money arises from its social function, not its physical properties alone. Gold’s value (SNLT) anchors it in the real world of production but this only works because society collectively agrees to use gold as the universal equivalent, masking the labor relations behind exchange. This duality allows gold to objectify abstract labor, transforming the qualitative diversity of concrete labor into a quantitative hierarchy. Gold’s symbolic power as money obscures this foundation, making value appear as a natural property of gold itself.
Marx’s genius was to show that value is a social relation, not a property of things, and money is the alienated expression of this relation. If producing a chair takes 10 hours and an ounce of gold takes 20 hours, the chair would be worth half an ounce of gold, but in reality a chair can also be worth a quarter or eighth an ounce of gold if notes are overissued. This shows that the exchange ratio of chairs for money is arbitrary, but the ratio between the portion of total social labor to create a chair, and total social labor to create all gold in circulation is constant. Money serves as a measure by its portion of total represented labor time not the labor embedded in gold directly.
In practice, the amount of gold (or money) a chair can command can change even if the SNLT for both doesn't change. This seems contradictory, but the key here is the difference between value and price. Price can deviate from value due to market factors like supply and demand. So even though the intrinsic value (SNLT) of the chair and gold are fixed, their prices in terms of each other can vary. Overissuing money like printing more paper notes affects the exchange ratio, which Marx attributes to changes in the value of money itself rather than the value of the underlying commodities.
Money's role as a measure of value isn't about the labor embedded in money itself but about the portion of total social labor it represents. So, if the total money supply increases, each unit represents a smaller slice of the total labor pie. This aligns with Marx's idea that money is a social relation, representing a claim on society's labor. While the exchange ratio (price) can become arbitrary, the underlying value (SNLT) of commodities remains tied to labor. Money's value is as a social construct representing a fraction of the total labor, rather than being directly anchored to a specific commodity's labor time. Money measures value not by its own SNLT (gold’s labor-time) but by its proportion to total social labor time.
Marx’s framework holds clearly, gold’s SNLT anchors value, and deviations reflect monetary policy decisions, not flaws in labor theory. In the C-M-C circuit, the first exchange (C-M) converts the commodity's value into a price (money), and then the second exchange (M-C) uses that money to acquire another commodity. It's the commodity's value being measured, not the money's value. With fiat money, the C-M-C process still involves measuring the commodity's value in terms of money (price), but since fiat isn't understood to be a commodity, the value measurement is more abstract. Fiat money still functions as a representation of social labor, even if it's not directly tied to a particular commodity's SNLT.
Price is the monetary expression of value isn't the same as value (SNLT), and in the exchange process, we're dealing with prices, not direct values. So even though Marx says value is determined by SNLT, the actual exchanges use prices, which can deviate. But Marx's theory is about the underlying value determining prices in the aggregate, even if individual prices vary, not about individual values. The process isn't about equating the value of money itself but using money as a measure for the commodity's value. So in the first exchange, the commodity's value is translated into a price, which is a quantity of money, but that doesn't mean we're measuring the money's value. Instead, money's role is to express the commodity's value. The measurement is about the portion of total social labor represented by the money, rather than the labor in the money itself. Value measurement works when money itself isn't a commodity, because prices represent a claim on total social labor rather than a direct equivalence.
Marx's asserts that money has value but this isn't necessary for its function, just a result of its historical development. Marx does argue that money originated as a commodity with intrinsic value (like gold) because it needed to be a universal equivalent grounded in socially necessary labor time (SNLT). However, once established, the form of money can evolve into symbols (paper, digital) that represent value without having intrinsic value themselves. Even though fiat money isn't a commodity, it's still fetishized as having inherent value, masking the underlying social relations of labor. While Marx argues that money must originate as a commodity with intrinsic value (gold or silver), he also acknowledges that, historically, money evolves into a symbolic form (paper or fiat) that no longer requires intrinsic value to function.
Early money (cattle, grain, metals) arose because societies needed a material basis for equivalence in exchange. Gold became dominant due to its durability, divisibility, and the labor required to mine it. Marx traces how money evolves from a commodity to a token or symbol (coins, paper notes, fiat). This shift is driven by capitalism’s need for flexibility and abstraction. Coins lose metal content over time but retain their face value, revealing that money’s social function (as a medium of exchange) can outlive its material substance. Governments issue paper money, initially backed by gold but eventually unmoored (fiat). Marx calls this a "forced loan" from the public, enforced by legal tender laws. Paper money has no intrinsic value, yet it functions as money because society collectively accepts it. This "illusion" relies on capitalism’s existing value relations (exploitation of labor) to sustain itself.
Marx insists that money’s commodity origins are important, because they explain why money retains its social power even as it becomes symbolic. Capitalist ideology naturalizes money’s symbolic forms, making it seem as if value arises from money itself. This fetishism is only possible because money originated as a commodity with labor-value, but that doesn't mean money must stay a commodity. When fiat systems collapse (hyperinflation, bank runs), the repressed truth resurfaces: value ultimately depends on real production (labor) and social trust, not abstract symbols.
Marx’s theory transcends the materiality of money. Whether money is gold or fiat, it is fundamentally a social relation. Fiat money embodies capitalism’s central contradiction that Marx discovered, value must be rooted in labor, but it is increasingly represented by abstract symbols. Marx’s theory is not undermined by fiat money, it is vindicated. Money’s commodity origins are a historical necessity, but its symbolic forms are a social necessity under capitalism. The tension between these poles defines capitalism’s unstable evolution.
Commodities are produced, sold for money, and money buys new commodities. This process depends on the totality of social labor and the continuity of circulation. Fixating on gold’s materiality ignores how money’s role is sustained by social relations. Gold’s importance dissolves when we recognize that money’s essence is not its material form but its function as a social claim on labor. This claim persists whether money is gold, paper, or digital. Marx’s target is not gold itself but the capitalist ideology that naturalizes money as a "thing" (gold, dollars) rather than a social relation. The belief that "gold = wealth" distracts from the reality that wealth derives from labor, not hoarding metal. Marx calls this "the religion of everyday life." Marx’s analysis of gold is not a defense of its necessity but a critique of capitalist mystification. The solution is not to return to a gold standard but to abolish the religion of money, to abolish capital as such.
"The life-process of society, which is based on the process of material production, does not strip off its mystical veil until it is treated as production by freely associated men."Marx's point, throughout this entire section, is that money is always already an abstract symbol of congealed abstract labor measured by SNLT and that the SNLT is proportional to the quantity of total money, not the value of that money. Precisely the opposite of what you claim, which can only be true if you conflate value and price and fetishize money as an object independent of its social relations, and treat individual exchanges isolated from circulation, which is exactly what Marx is critiquing.