As we have already indicated in Capitalization vol. 2 (Szepanski 2014b), the Greek economist John Milios has offered an important approach to a precise conceptual determination of the contemporary capital relation with his monetary theory of value, based on the reading of capital by Louis Althusser. (Milios 2009) In doing so, Milios explicitly opposes both heterodox economics and a Marxism underpinned by Ricardo, citing value (and capital) as a social relation as the fundamental discovery in Marx, insofar as value is (rather than expresses) the relation between the concepts of money and commodity. Commodity and money (as form) thus cannot exist independently of value, with none of the forms of value developed by Marx in Capital Vol. 1 having primacy over value. Within the money form, then, for Milios, money must be represented by the formula money-commodity and commodity by the formula commodity-money. Milios here refers to the Althusserian type of structural causality, according to which structure is immanent in its effects and does not exist outside these effects.
For Milios, the simple value form, with which Marx begins the conceptual presentation of value forms in Capital vol.1, essentially says that one unit of commodity A has the value of x/y units of B. This is a simple form of value. Milios here, in contrast to most Marxist interpreters of the first chapter of Capital, assumes a single commodity differentiated into two components, with commodity A occupying the place of the relative value form and “commodity” B that of the equivalent form. The value of commodity A is to be measured in the units of the secondary use-value of “commodity” B (i. e. “commodity” B here takes the role of the equivalent, or its secondary use-value is considered to be the measure of the value of commodity A, which is in the relative value form). As soon as a thing takes the position of the equivalent in the expression of value, the magnitude of its own value can no longer be expressed quantitatively. On the contrary, the thing now functions purely as the quantity of another commodity. The simple value form thus states that x units of commodity A possess the exchange value of y units of equivalent commodity B, or that the exchange value of a unit of commodity A is expressed in x/y units of “commodity” B. Thus, for Milios, the “commodity” B, which is in the equivalent form, is potentially already money. (Cf. Milios 2004)
Now, according to Milios, Marx has no problem with passing through several transitions from the simple value form to the extended and general value form to the money form. The general value form is characterized by a single (excluded) equivalent in which all commodities express their value (they are now always in the position of the relative value form.) Only a “thing,” whose materiality is, however, completely secondary, can constitute the universal equivalent qua its function. In this sense, the first function of money is to be the (external) measure of commodities as a general equivalent. The general exchangeability of commodities is expressed or realized here in an indirect, medial sense, that is, through money, which functions as a general equivalent and through which all commodities express their value. Money is considered by Milios to be the representation of value, that is, money stands for the general form of value of commodities and has the potential to be immediately converted into any form of use value. (Ibid.) And thus, even before the commodity enters into exchange, it is at least potentially already price (but it has yet to be sold) and thus related to money. Marx, as, incidentally, Keynes largely did on this issue, insists on the endogenous character of money, whose meaning is by no means to function as a mere medium of exchange facilitating transactions in the markets. Milios thus determines the first “function” of money with Marx as that of the general equivalent or external measure of values, i. e. the general exchangeability of commodities among themselves can only be expressed and mediated by money. Marx conceives, at least as Milios sees it, a monetary theory of value from the outset. Going further, for Milios the value relation is the abstract expression or embryonic form of the capital relation in which money is a functioning as a process in itself. (Ibid.)
One can now continue, as for example Peter Ruben does, and as is commonly done in Marxism, to assume two commodities instead of one, and write the value form as follows (Ruben 2015: 27):
x commodity A = (x commodity A : y commodity B) X y commodity B.
What both Milios and Ruben want to avoid at all costs here is to fix the adversarial nature of the equation x commodity A = y commodity B. The equation x commodity A = y commodity B is to be regarded as adversarial insofar as A and B are qualitatively different commodities. Because the equation, which Ruben does not discuss, is in principle reversible, changes of position of the commodities are at least virtually given, although none of the commodities can actualize themselves in both positions (relative value form and equivalent form) at the same time. (The fact that commodity A is in relative value form and commodity B in equivalent form in the equation is to be read as a gradual difference). Also by this interpretation of the simple value form the contradictory is resolved. Here, however, the axiom of symmetry then proves to be absolutely necessary for the representation of the equivalence relation of classical commodities. (Cf. Szepanski 2014: 138f.)
The following must be said about the equation: the sign of equality is set and is executed at the same time, thus it also has a performative sense, which only takes place in a calculative way as a reference to an abstract monetary unit. In the sign of equality there is a social dimension, that of money. (Brodbeck) As an exchange in kind between two owners of two products no equation takes place, siw qird is only added by the theorist.
Ruben would probably consider the explanation of money, such as Milios makes, insufficient, while trying to make strong the function of money as a medium of exchange or as a tertium comparationis of value comparison. If vA =vG and vB=vG, then it follows that vA=vB (v=value). (Ruben 2015: 30) Finally, Ruben considers the transitivity of equality purely logically as the crucial property of the money form (x=y and y = z, so x=z). He also brings into play Hegel’s conclusion of existence (A-A-A): “If two things or determinations are equal to a third, they are equal to each other.”(Hegel 1950: 326) 1 Transitivity and equivalence of commodities do not exist prior to the money form.
Back to Milios. Although we converge with Milios on many points regarding both the conceptual definition of monetary capital and financial risk and the issue of derivative markets, which will be shown later, we came to different conclusions regarding the conceptual definition of money already in Capitalization vol. 1 (Szepanski 2014a: 154f.). However, there is at least agreement that value theory is only possible as a monetary theory of value. Let us briefly elaborate on this.
In order to demonstrate the lack of stability of economic form constitution, Marx resorts in the first edition of Capital to the presentation of a fourth form of value: “The general equivalent form always accrues to only one commodity in contrast to all other commodities; but it accrues to every commodity in contrast to all others. But if every commodity puts its own natural form in opposition to all other commodities as general equivalent form, then all commodities exclude all from the general equivalent form and therefore exclude themselves from the socially valid representation of their value quantities”. (MEGA II/5: 43) The argument in the context of a fourth value form, which Marx introduced in the first edition of Capital and deleted again in the second edition, shows that, viewed from the perspective of a discursively fully developed capital, the representation of the money form as the result of derivation from premonetary value forms must simply fail, because in the fourth value form the commodity that takes the place of the general equivalent excludes all other commodities from the equivalent form. And this is true for every commodity, so that we have to deal with any number of equivalents. We are faced here with the problem of Hegelian bad infinity. The fourth value form thus remains conceptually underdetermined (it does not solve any economic problem) just like the simple, the unfolded and the general value form, because it is possible here that within the specific syntax of commodity concatenations in principle every commodity occupies the place of the general equivalent, with which all commodities exclude all from the general equivalent form. (MEGA II/5: 43) The position of the equivalent makes the respective commodity exchangeable against all other commodities and at the same time this position is occupiable by all commodities. There is neither a valid numéraire nor a general validity or stability of a social context qua value form. Consequently, the representation of value-forms does not reach the general equivalent (value-form 3 in Capital vol. 1) even in a purely logical way, and consequently does not advance to the money-form (a money-commodity then takes the place of the general equivalent when the money-form is consistently developed – this is how most Marxist economists still see it, apart from exceptions like Michael Heinrich).
Frank Engster also tries to solve this problem by referring to the exclusion of a money commodity, which is given practically-ideally in the strong sense of a gift, in order to fix an ideal unit of value, which is also decisive for the quantification of the relations of all other commodities. Thus, not only the apparent break between the general value form and the money (form), as stated by Backhaus or Heinrich, but also that between the general, third value form and the fourth value form would be cemented. (Engster 2014: 223) But who decides the exclusion of the money commodity? In a sense, it is the commodities themselves that, before they adhere to an ideal unit of value (money), have already decided the exclusion of the money commodity. But is it really the commodities themselves, or is it quite practically the commodity owners, or is it possibly neither the commodities nor the commodity owners? Is it the money, or is it even the exclusion itself, which decides the exclusion, and thus promotes the immediate relation of the commodities to each other and their relation to the money? On the one hand, it is money that at one stroke exposes the commodities to its ideal unit of value and thus places them in quantitative relations to each other, that is, opposes them in order to stand up for their identity at the same time. On the other hand, money reflects towards the commodities only the relation which these have already decided with the exclusion of a money commodity. One will not come to a real solution here. For the trained Hegelian, the synthesis would probably consist precisely in making the exclusion itself the factor of the exclusion, in order to raise the sliding process to the next level in a well Hegelian way. This, too, is probably what is meant by the figure of catching up.
Money comes etymologically from “to apply,” and this alludes to the fact that as vetretung something acquires meaning, no matter what it means. With every being valid, the claim to a kind of influence is also shown; what is valid is not only to be observed, but necessarily to be obeyed. The claim can emanate both from a theory and from an objectivity such as money, the latter asserting its claims “as if by itself.” The logical validity of a proposition results again from the impossibility of affirming and denying it at the same time. Here validity belongs to the form of theoretical practice.
Money does not simply passively claim a function of measure (of commodity values), but it uses the weak or underdetermined force of a validity (weak, inasmuch as it is capital in the last instance that effects the force of money) that distinguishes its function, and does so as if it had ever already attained the function of validity. It can do this because its first two functions, of being a measure (it measures the productivity of capital and labor) and a means of circulation, are themselves results of money as capital. It is important to note that money does not have or perform functions that are given to it by a purpose outside its social context; rather, money is these social functions, i.e., processes of generating meaning and validity.
In its function of measure, money already functions as a reliable social fact in a socio-economic context of arbitrary, infinite monetary transactions within capital as a total complexion.2 In this respect, the idea of catching up could well be affirmed. Money, which is now to be understood from the outset as a result of capital, distinguishes itself at once as symbolic money (the name alone is then sufficient to set its effectiveness) and for this purpose draws on an admittedly not arbitrary material from the collections of commodities for its embodiment (necessary divisibility of the material). As such, money then indeed realizes a kind of objectified, social relation.
The commodity is that which costs something, and money is that which it costs. One thus formulates correctly when one says X euros are to be paid per commodity x or derivative y. Thus a relation is symbolically expressed. Capitalist money achieves its validity as a symbolic marker representing (unstable) purchasing power – and it does so in one fell swoop, insofar as money is just “socially” already recognized as a social fact. And this means that money is associated with the certainty that one will get something for it. Symbolic money, as a principally non-content (it is non-material, it is therefore rather an unding than a thing, it exists only qua representations), refers to the most diverse commodities, which are opposed to money as all contents, but which are reduced to pure saleability; and thus commodities are precisely not money and money not commodities. (Cf. Bockelmann 2004: 180f.) The fact of money’s lack of content also points to the fact that money is not to be conceived as the embodiment of general wealth (as a money-thing or money-commodity); rather, in all its materializations, it remains a disembodied body, i.e. the object (in itself) or an abstract form. Thus, coins, bills, numbers, and bits and bytes can represent money, and this means that no gram of value is stored in money. Furthermore, money, by representing or representing capital and its movements, itself has a weak active force, thus valuing, at least potentially, all possible objects. And the percussive nature of the striking of symbolic money, which is at the same time measuring money, means that it puts (and is put by) all commodities into immediate exchangeability.
The money has no content, while all contents face it as a quantity of commodities. All contents, in turn, means that the commodities are elements of a quotient set whose property is characterized by equivalence (symmetry, reflexivity, transitivity). And this means that the commodities can be exchanged for a quantity, geld, which is real as a unit of account. Commodities, as part of this quotient set, must actualize their equation as values describing their equivalence relation (which is in no opposition to the polarity relation of commodities), while value continues to have purely virtual status. (Commodities must be sold or actualized, otherwise they merely possess the status of a potential commodity.)Despite the separation in principle, money and commodity remain related to each other qua equivalence, insofar as the commodity is defined by its reference to money as well as the latter by its reference to the commodity, but at the same time commodity and money are the negation of each other, i. e. money is non-commodity by its reference to the commodity as the commodity is non-money in its reference to money. (Ibid.) The indifference of money to commodities does not mean indifference here, but rather aims further at the fact that the qualitative multiplicity of commodities is reduced by their relation to money to purely quantitative relations among themselves, that is, that commodities are without exception related to money (which has the form of immediate exchangeability) as economic quantities (price) and exclusively in this relation are then considered equal among themselves. Money is the expression of a specific social relation in which the results of interdependent as well as separate production processes, namely commodities, are related to each other via money.
By virtue of its objective validity, money can potentially be used to “have everything” (just as all obligations can be settled), and this corresponds, on the one hand, to its validity as capitalist money, and, on the other hand, to its peculiar positioning or relation vis-à-vis commodities. The validity implies convertibility or potential purchasing power, i.e. exchangeability against commodities, which, however, is not a substantial property of money, but arises precisely from its specific relationality vis-à-vis commodities, which in turn, as price (in the medium of money), bring money itself to bear. This purely relational aspect between money and commodities is not quantifiable. It is a function of representation, whereby validity does not come into effect in itself, but always for others, i.e. the validity of money explicates the structure of the representation of an absent, insofar as the absent concerns capital and value. (Strauß 2013: 129f.) And it is necessary to add that commodities receive a value, for instance, because as results of production they carry a value objectified in themselves, but as products they are placed in a relation to money in circulation, which in turn leads to new forms of movement.
As part of economic reality, capitalist money quite explicitly realizes validity. And validity, in turn, is based on the fact that money is recognized by all social actors, or, to put it differently, when the meaning “money” is unquestionably ascribed to things or commodities in a process of thought, however rudimentary, which is at the same time the consummation of calculation. (Cf. on this the work of Karl-Heinz Brodbeck). By using money as a matter of course (calculating, measuring, buying, selling, saving, etc. – all performative acts), social actors have uno actu recognized money as money, and that means also its validity. Money cannot be separated from validity. And money must be universally valid, it must be valid for all social actors without exception, or, to put it differently, it must be universally common to all that they recognize money as money and its validity. Brodbeck describes this social reality as a circle that is ever already given and is quite real: namely, because everyone knows and counts on the fact that everyone else also recognizes money as money, therefore everyone recognizes money as money. (Brodbeck, Phenomenology of Money). The substance of money is thus nothing else than a socially and collectively generated and ever already circulating fiction of the validity of money, which is nevertheless quite real and compelling. Thereby the relation of exchange, the relation of commodities to money, is logically earlier than the relations, commodities and subjects of money. The validity of money, which cannot be separated from its meaning, is constantly generated anew in a social process, which is constantly carried out by everyone in a participatory manner. In this respect, it is not an existent.
Money is recorded in numbers and sums on accounts, it exists in these pure numbers. At the same time, however, this money is endowed with a very special power, namely the power to be exchanged into any kind of something. As a quantified non-substantial thing, money is the comprehensive power of access to x-anything. Bockelmann writes: “It becomes rather itself the measure, a measure in itself, pure quantum as a purely for itself existing quantity between commodities. And money becomes this according to the following, by now well known logic. Money, as the one and pure means of exchange, which is to be exchanged for virtually every commodity, can itself be determined only quantitatively, as pure quantity. And since it has to stand in for virtually all goods, it has to appear itself in virtually every possible quantity, it must be able to assume all numerical values in a freely scalable way. And it results: – Money as the one thing each – exchanged for virtually all goods – and therefore as pure quantity in freely scalable numerical values.” (Bockelmann 2020: 215) More precise would be to put for quantity empty, abstract unit of account. The transaction between commodity and money aims (on the part of the seller of commodities) at an abstract number, which is nothing but its own quantity. Money in its empty unit is itself the measuring thing. As a multiplication of this empty unit, money possesses the
form of the infinite series of numbers 1, 2, 3, etc. “In price an empty unit is the measure of all things. In
a physicalist language this means then: All physical quantities must be measurable – thus consist of a “unit” and a “numerical value”. The unit in which things are viewed through the glasses of money is on things only the quantitative mirror of money.” (Brodbeck)
The emptiness of the content of money is its function, namely to carry out this or that transaction. Money is thus not, rather there is a relation of reckoning in monetaryities (money is a relation), in which the relations money and commodity each function in their place.
As “nothing” money inheres the reproduction of an abstract unit, it is pure number. It calculates and measures in the abstract unit whose model is one, and in this abstract unit of calculation it is the measuring. Because it serves as a measure, it is, it cannot in its turn not be measured again, that is, money has no value. It is the unit in which the market participants calculate, whereby this allows to establish relations to goods. All prices must be expressed in a single currency, which ensures the identity of the unit in which is calculated. The unit of the number 1 remains an axiom. The unit is not an existing entity, it is rather a relation that precedes its relata, or, to put it differently, the unity of the many must take place as a process of a social validity that is in turn recognized by all the subjects of money.
As a multiplication of this abstract unity, money can then take the form of the infinite series of numbers, 1,2,3, 4, etc. Money must be distinguishable as a discrete entity, and there must be a like multiplicity of this entity. It is thus always also pure quantity. Money as an abstract measuring entity is at the same time always related to something, to measured non-money or goods. In calculating with money all things are measured in an abstract unit or with the same measure – money is the abstraction of a number, the one, in calculating. However, it does not bring forth the counting relations in real terms, rather it indicates the structure of quantitative relations, which then become mathematics as a thinking form of social and thinking arithmetic. The phenomenon “money” is in the execution at the same time the thinking form of an abstract unit, the empty one of the valid calculating system. In transactions, money subjects subject themselves to the validity of the money unit, which thereby appears as a pure number. And the act of calculation carried out in it sets in turn what money is as a unit of calculation.
To the one, however, the zero must be added without fail, as Brodbeck has shown. The zero first gives the numbers a position, it is a placemaker that leads to a classification of the numbers in a system of counting that is infinite. (Brodbeck, 921) A number like 3 gets a higher rank by the zero: 30, 300, 3000 etc.. Here, then, the nothing is to be found in money, which multiplies values, because even the unit (the one) of all calculations is empty, namely a social fiction. The zero multiplies the social fiction given in the unit of the calculation and grants a digit a higher rank in the validity. The money indicates the structures discovered in mathematics as a social institution, its form of movement is, as will be shown, that of the empty more. (Brodbeck).
Everything that is given over to the money economy receives a price through money. The price is the sign/number of money on the goods. The practice of money calculation, which is always also calculating thinking (Ratio), is thus at the same time the practice of the elementary forms of arithmetic and algebra. The equality of all goods appears as the identity of a number assigned to two goods in the price. The price has the dimension unit of goods/unit of money. On the one hand, the money units must consist of elements of the same kind (numbers; abstract number of money units or pure quantity), on the other hand, the goods to which one refers the number of money must in turn be measured with measures (weight, 1kg) (a measure here unites number and unit of measure). In the price, therefore, measurement is implicit. Calculating in money, relating money units to goods units, is a very elementary measuring process. In this process, the quality of the goods is abstracted as a general rule, so that for the calculating thinking only the numerical value with reference to the monetary unit counts and is valid. Money is a measure, it is the measuring which is not measured by anything else, while the measured is then a social unit of the multiplicity of products and needs. The measuring of products in money, which is the consummation of calculation, establishes this unity in the first place. The measurement, however, is not one of products as their intrinsic nature, whether one assumes labor time or the utility for it as essential, but is based on a social act that produces validity.
The theoretical position of conceiving of money purely as a medium of exchange or as an asset arising from the exchange of commodities does not take into account that not every offer to sell must lead to a purchase, and thus in complex economic relations quite different forms and functions of money must necessarily come into play.3 Of course, exchange, or more precisely circulation, in so far as it co-regulates the reproduction of a complex economy based on the division of labor, represents a moment for modern capitalist money, but it is logically and categorically presupposed by money, without which it cannot exist as a population of exchange processes. This requires a numéraire that explicitly possesses an algebraic structure. (Ibid: 336) When Marx speaks of money as a “social relation,” this means that money must already possess a certain stability, a wide dispersion and power, i.e., be generally accepted and recognized, or, to put it in modern terms, have inherent in it a network quality that guarantees the reproduction of a highly complex capital economy. (Keynes grasps money as a numéraire or unit of account, already rudimentary here for the measure of value and credit, as the most important of all money functions). In order to be considered capitalist money, which is essentially “more” than just numéraire, to which the more is thus already inscribed and which is thus ever already related to deep money and capital markets, for this a highly developed payment and credit system must exist within the framework of capital as a total complexion, so that money transactions can be processed efficiently and as frictionless as possible and in particular the instructions on future payments (capitalization) can be realized. In addition, substitutes must be available for its value-storage function. For its function as a measure of value, capitalist money does not have to have a 100% stable value standard, for example, qua money commodity (ideal value unit), but the value standard must also not be too volatile, otherwise its asset protection quality or its function with regard to credit becomes problematic (inflation/deflation). Even the modalities of money issuance are not fully regulated. Nevertheless, a capital system based on credit-financed capital investment, fictitious and speculative capital, needs a stable measure, or as they say, a stable valuation standard. The term “standard” here refers more to the aspect of a socially recognized and universally accepted money than to its potency for quantification. This stable standard of valuation (function of calculating money) refers to the general transmission capacity of money, but does not even bring a number of other “money functions” and forms of money to the fore – means of payment, withdrawal of the money supply from accumulation, money as capital, etc. (Cf. Bahr 1983: 406) In the case of means of payment, the promise and its redemption conceptually diverge. Without sufficient operationality of these forms of money, the capital economy cannot be kept sufficiently flexible, while the fully developed capital economy remains presupposed for money. But also already the functions in their meaning are not possible without the money. Today, money is based on constellations consisting of state and private functions and controls that are both regulated and contingent. Private banks are regulated to a certain extent by state authorities and central banks (through the monetary policy of central banks), but the mere money-creating issuance of means of payment by private banks qua lending or the existence of derivative markets indicate that the steering competences of states and central banks are limited insofar as they cannot regulate the global dynamics of money capital accumulation in toto, but can only accompany it to a certain extent.
The validity of money qua purchasing power also marks, as we have already seen, a separation of money from all commodities, with which money is at the same time subjected to a development that aims at multiplication in primary potency, which in turn money cannot achieve at all within its equivalence relation with commodities. In the price, which indicates a setting of measure relations, a drawing of boundaries is accomplished, while money as an abstract unit is not subject to any boundary. Money as the one or unit gives the measure, but the unit itself is measureless. (Brodbeck, 866) The appropriation is not given by exchange, but necessarily presupposes the capital relation. And this implies that money can also be appropriated, which can then be claimed as property. If money can be multiplied at will as a trans situational unit of account, it cannot be multiplied as a property right in the form of banknotes and bank deposits.
(But can’t money be both a general equivalent/pure medium of exchange, and thus a condition of capital, and a (partly) state-shaped credit-debt relation? And can it be decided historically at all whether money was first a general equivalent or a credit-debt relation? We can confidently answer the first question in the affirmative, and we will return to the question in our discussion of Geoffrey Ingham’s theory. We can say this much, however, that capitalist money is probably based more on the historically evolved economic conventions of capital-economy than on money created by the law of the state. See also John Milios’ study of the emergence of capitalism in Venice. (Milios 2018) Therefore, until today there is no 100% valid legal definition of money to report. Who throws the money in which quantity and in which form into circulation, that just cannot be legally prescribed by the state, what one also recognizes by the fact that the Giralgeldschöpfung of the private banks is subject to no sufficient legal regulation until today, yes the Giralgeld of the commercial banks is accepted by the state as quasi-valid money form, but is officially nevertheless no legal tender, although it functions from convention or because of “good faith” like a legal tender.
With the rise of capitalism came a particular configuration of money creation in which the relationship between the state and the financial sector became public-private partnerships over certain historical periods. Here, economist Geoffrey Ingham (Ingham 2008) identifies three main groups of actors-states, private financial firms, and households-struggling over money, its effects, and its redistributive powers. The starting point is a) money as a structural and systemic function in the context of capital accumulation, b) money as a public-private hybrid of circulating credit-debt relations, and c) money as monetary capital that realizes assets of all kinds, derivatives, and future promises to pay as returns. Ingham’s theory of money thus analyzes money in the context of a fluctuating relationship of three actors, with money being constantly negotiated between these three groups in a web of all-round and mutual dependencies, think for instance of interest rates, velocity of circulation, inflation rates, redistribution, etc. For Ingham, money comes into existence when it is accepted by the state either as a means of intervention in the market or as a means of paying taxes (Ingham prefers the latter).
In this context, A. Samuel Knafo has shown that the gold standard was in fact a technology of power actively shaped and used by the British state for its own purposes. (Knafo 2013: 176) Knafo writes that in 17th to early 20th century Britain, “the success of the dominant financiers resulted from their flexibility in adapting to new structures of governance” (ibid. 2013, 177). In contrast, Joseph Vogl, in line with Marxist research, speaks of “seigniorial power” of the dominant financiers with regard to the economized form of governance and lists the following genealogical features for this (Vogl 2015: 103ff.): (1) The transformation of state power into private capital power is characterized by the establishment of heterogeneous institutions in which the integration of legal rules, political intervention, economic infrastructure, and diverse capital strategies occurs. (2) The state is increasingly subjecting itself to the power of private creditors by issuing government bonds. (3) The informal connection between state structures and private financialization gradually solidifies, strengthening the credit system and creating stable infrastructures for the movement of money and capital that enable fictitious capital to be traded on a broad basis. In this context, the central bank represents a specific institution of political-economic governance that today remains more tied than ever to the cyclicality of capital accumulation.
While Ingham’s theory may provide important clues for a conception of the power relations between these three actors, their struggles and their fields, not least their institutionalizations, he seems to neglect the hierarchical and vertical structures in these fields, which are precisely then condensed into entrenched institutions.)
Money intrinsically has no value; it cannot store value. The “value” of money, unlike the value of commodities, consists rather in the presence and realization of the relation G-G(capital). Money as capital contains the instruction for future increase, although it must be noted that the future sui generis cannot be determined, for as such it would already have passed. Money as capital is placed in a quasi-tautological relation to itself, in which the quantitative difference of G-G, that is, multiplication, alone constitutes the crux. The only sense of this relation, which leads from money to money, can therefore only consist in quantitative multiplication, or, to put it differently, this relation is a uni-lateration capable of quantitative addition. The surplus is injected as quantity into the tautological chain. Money as capital must satisfy the determination of the quantitative surplus, which, however, always remains scarce. To put it another way: capital is law that defines that the meaning of the relation G-Gmust satisfy the more, a more that is lacking per se. (Schwengel 1973: 294f.) The respective presupposed money (signifier) is treated like a signified (Mehr), which indicates itself in surplus signifieds (Geld). Marx now considers a further conceptual shift necessary to explicate this sliding figure, i. e. the conceptual difference of labor and labor power becomes the source of possible surplus production, whose determinant differentiator, however, continues to be capital, which differentiates a sui generis unfinishable movement. The signifier surplus value, which remains contained and at the same time invisible in the signifying chain of the money surplus value, indicates itself in ever further representative signifiers, which represent nothing more than the signifier of the surplus (as money capital). Money surplus value implies, on the one hand, differential repetition as quantitative variation, and, on the other hand, self-referential setting (determination), which, however, does not lead to any fixed result and can only have a definitional effect by permanently advancing multiplication. (Ibid.) As such a positing, it is compatible with quantified repetition. Surplus value now becomes the (absent) instance that at once decides the instruction on future multiplication. Capital must constantly hope for a gain in time, which, however, can never be caught up. This is expressed in money capital as difference, insofar as it depends on the project of calculating the future, which is always pending as the not-yet of appropriation, and this at the same time signifies the more that must be ceaselessly multiplied. The processes of the multiplication of money capital imply the release of social practices in which quantitative difference, positing (determination and superposition) and repetition (idempotence and virtualization-actualization) are mutually dependent, where positing implies the destruction of any fixed result qua potentially circulating structure (virtualization), which in turn implies repetition qua potentially fixable circulation (actualization). These virtualization-updating interconnections remain per se tied to the goal of achieving the more. (Ibid.: 294) A strange kind of un-equation that takes place here beyond a merely bourgeois distribution of the surplus product. Contrary to the equivalence of exchange, the abstract more is to be understood as that decisive instance of capital, as that displaced signified that is indicated in the representative signifiers of money. The concept of “money surplus value” here sui generis conditions the concept of surplus value, insofar as the latter has completely emancipated itself from the content, and this state of affairs implies, as a purely formal sliding process, the systemic “lack,” the “lack” of more, or the famous intemperance of capital, whereby this dominates the lack as an anticipation of the more and not vice versa, so that any Lacanian position of lack remains excluded here. (Ibid.: 191) Contrary to the exclusive founding of surplus value in living labor power, we also assume the possibility of a machine surplus value, an algorithmic surplus value, and in general a surplus value that arises from the exploitation of differences.
Conceptually, we have to assume a virtual simultaneity of commodity, money and capital, and this with a simultaneous determination of simultaneity by capital in the last instance. Within the quasi-tautological formula G-W-G`, money is not spent, but advanced and laid out in production, in order to return to itself multiplied from it. Money functions here as capital within whose self-referential relation G-G’ it circulates. If money as capital has the capacity to set itself as an end in itself, then it comprehensively dominates the sphere of production in order to integrate it into the primary monetary circulation G-W-G’. (Cf. Sotiropoulos//Milios/Lapatsioras 2013a: 43) Accordingly, the production and circulation of commodities are to be understood as integrations (both structural and temporary) into the monetary economy of capital, that is, as phases, aspects and parts of the circulation of money capital. We can think of this with Laruelle as the irreversible logic of uni-lateral duality, or as the mono-lateral nature of determination-in-the-last-instance. (Thus the sense of the term “relation” must be definitely transformed, namely into that of a uni-lateral relation or, precisely, of non-relationship). Marx has shown that on the level of individual capital the formula G-W-G’ represents the decisive expression of all economic relations appropriate to capital, and in this, of course, commodity production is included, which has now become a purely functional process, a process for exchange or for profit. Capital ever already binds the production process to (monetary) circulation, i. e. production is a phase or moment of the circulation of capital, whose general form can finally be inscribed in the following formula: G-W-P-W’-G’ (Ibid.).
In this way, the logic of capitalization applies apriori to every single capital, no matter to which fraction or sector it now belongs. Thus, first of all, every capitalist enterprise must be considered equivalent to every other, and this equivalence refers to the enterprise as a structural-functional “locus” of capital where and from which the main activities of money capital are generated. The above formula of money capital circulation (in relation to the circulation formulas of commodity capital and productive capital presented in the second volume of Capital) is the primary expression of capital economy and its social relations, which include commodity production as production-for-exchange and production-for-profit. This also means that money is only one manifestation, but it is the primary manifestation of capital. Every capitalist enterprise, no matter which economic sector it belongs to (primary, secondary or tertiary sector, circulation, finance), must apriori follow structurally equivalent capital processes, starting with the use of money capital and the purchase of goods, which generates costs (purchase of means of production, raw materials and hiring of labor), in order to then produce goods in the course of production processes, which belong to a different quantification compared to the purchased goods, i.e. realize as monetary output a higher price than the monetary input. 4
Each capitalist functions structurally as a kind of trader who purchases goods with borrowed money or as a money owner (input of the enterprise) in order to sell a produced output, and/or as a manager who balances, monitors and coordinates the production processes in order to make them effective. And prices are determined in a firm not only to produce a monetary output that is higher than the monetary input of a given period, but to realize at least an average rate of profit in the markets. And this is precisely true for the enterprises of the financial sector. The financial enterprise generates costs, hires labor, and buys machinery to create and sell certain goods: Exchange values that are use values for others. (Ibid.: 45) The financial enterprise may include different types of institutions, but it produces precisely certain services that are capitalist commodities or capital. Financial capital is also subject to the relation of virtually circulating capital structure and virtually fixable capital circulation. It is thus a matter of circuits initiated by money and always only provisionally completed, or, more precisely, of repetitive extended spiral movements or processes of extended reproduction (including production and circulation) homogenized by money, which possess their quasi-transcendental condition at the level of total capital.
If one extracts the most important phase from the permanently proceeding capital metamorphoses of money, commodity and productive capital, namely the movement of money capital itself, then at least two subjects of capital are present in it. The place of capital is occupied by the money capitalist and the functioning capitalist, so that in the analysis of capital one cannot abstract from the outset from the circulation of interest-bearing capital. For this purpose, the Marxist economists Sotiropoulos/Milios/Lapatsioras developed the following diagram (Ibid.: 8):
The money capitalist (A) is the addressee and owner of collateral (shares, securities, derivatives, etc.), which contains a written but still contingent promise of payments from the functioning capitalist (B), despite the collateral services rendered. This promise certifies that the monetary capitalist (A) remains the owner of the monetary capital (G), so that in a monetary transaction the acting capitalist (B) is only transferred the right to make use of the monetary capital (G) of the monetary capitalist (A) under specific conditions (interest and repayment) for a certain period. If the company is listed on the stock exchange, then the managers of the company correspond to the acting capitalist (B) and the legal owners correspond to the money capitalist (A). The functioning capitalist (B) uses the money capital (G) as capital to make the necessary purchases and to organize and control the production process with the aim of generating profit. (Ibid.: 8f.) This now leads to the following consequences: 1) The two places inherent in the capital relation are occupied by financial and functionary capitalists, thus rejecting the distinction made by Keynes between a productive class located within enterprises and an external class of rentiers parasitic with respect to production. 2) The financial security represents a form of ownership of capital. First- and second-order property titles are duplicates of paper that have a price for the owners in terms of an income to be realized in the future (capitalization according to an interest rate that represents the respective risks). Property titles are forms of fictitious/speculative monetary capital. The price of a property title is the result of the capitalization of a money income. The financial mathematical calculation operation consists in calculating (discounting) the present value (of an economic unit) of the profits expected in the future. (Bichler/Nitzan 2009: 188f.) 3) The financial mode of capitalist property as a promise and demand for the appropriation of a future surplus opens up a terrain on which, as a tendency, every x-any income stream can be set in relation to fictitious/speculative capital. 4) The rise of non-bank related credits occurs. In this context, risk management, which can be diversified into solvency, interest rate, liquidity and credit risks, is now at the heart of financial markets and their decision-making problems. Contingency, as the possibility of non-realization of an expected profit, must always be included in a company’s planning.
The monetary techniques of risk management can be explicated by the example of the pricing processes of capital. The authors Sotiropoulos/Milios/Lapatsioras have written the following formula for this purpose: Given a constant interest rate (r) as well as a future stream of profits (Gt + 1,Gt + 2 … Gt +), a present value Kt can be capitalized as follows(Sotiropoulos//Milios/Lapatsioras 2013a:140):
Since any future profit is to be classified as contingent, there is no way to accurately predict profits as quantities. However, one can at least inscribe the degree of confidence, expressed in the rate of interest r, with quantitative quantities.
The idea of the capitalist as a functionless and absentee owner who earns his profit outside the production process in the form of an annuity by taking advantage of the scarcity of capital goes back to the works of Ricardo. Autonomy from the production process gives the rentier free access to the financial markets, where he profits as a participant precisely when he generates rent or profit by taking possession of a part of the income created in the “real” sphere of production. In this sense, the modern rentier functions as an irresponsible usurer who obstructs the production and accumulation of use-values by seeking and realizing profit exclusively in the sphere of circulation (through speculation and appropriation). This is how the G-G′ formula is read, at least in part, in the Marxist literature: According to it, the profitability of capital can be secured by two different modes: A productive mode (G-W- G′) and a parasitic or speculative mode (G- G′′, with G′′ = ΔG′). Ricardo himself, of course, does not come to such conclusions; nevertheless, he has significantly influenced most of the Marxist literature with his theory of rent and labor value. Finally, when the rentier becomes dominant in the economy, the productive capacities of “society” are suppressed or sabotaged, as Bichler/Nitzan put it (Bichler/Nitzan 2009), while the speculative and predatory activities of financiers come to the fore. The main motive of capital would then indeed consist in the restless search for profits in financial circulation, which, however, would ultimately still come from the production processes of industrial capital or from the incomes of wage earners. Circulation would be the crucial means to absorb profits previously generated in production or to be generated in the future to cover debts. This very fact would favor today the stagnation and instability of the production of use-values. This is a position diametrically opposed to Marx` theory of value and capital, as we will show.
In concluding our short analytical run through the monetary theory of value, let us turn to fictitious capital. In the case of interest-bearing capital, the value of regular money payments (interest) is determined by capitalization at the respective average rate of interest. The Marxian concept of fictitious capital (government bonds, securities, derivatives etc.) cannot be understood without reference to interest-bearing capital, because here already a fictitious doubling of capital into functioning capital on the one hand and a property title on the other hand takes place. Interest-bearing capital is sui generis fictitious capital whose pricing is done on the basis of income and returns expected in the future. The true manifestation of capital is necessarily its fictitious form. Capital is fictitious not because of its ephemerality in the financial sphere or because of its imaginary detachment from “real capital”; rather, as John Milios at least sees it, the term “fictitious” means that the relations of capitalist production are reified – the relations of capital appear as a thing, a sui generis commodity, a financial security. (Milios 2004) However, it is important to put the term “reification” in quotation marks, because fictitious capital ever already includes a temporal and relational pricing process related to the capitalization of future income. Fictitious capital represents a specific form of real-financial capital. Here, a “doubling of reality” takes place, so to speak, although the “real reality” can only be distinguished analytically from the fictitious reality, while the link between the two realities can never be broken. On the capital market, the fictitious doubling of capital (functioning capital and property titles) acquires a real-economic existence. The fictitious capital, which is already probability-oriented, has a fictitious character insofar as future payments are uncertain, but as a rule they are nevertheless made (whereby collateral must be deposited in the case of loans) and thus have an effect on the “real reality” of the economy, thus they are themselves “real” again. Already in the case of a loan the fictitious capital itself can double, if the borrower in the function of the capitalist uses the borrowed sum of money profitably and the lender can count on repayment and interest in the future. If now the monetary claims included in the fictitious capital take commodity or capital form (shares, bonds, securities, etc.) and become arbitrarily transferable, the capitalist will be able to use the borrowed money in a profitable way. ) and become arbitrarily transferable, then the mirror image of the initial capital participates in the circulation of capital just like the original sum of money: The purchase of a property title enables the specific use of the secondary use value of money capital, which consists in its trade and return, while the seller of the bond is by no means excluded from the capitalization of money capital, for, as in the sale of ordinary commodities, the issuers of the bonds have at their disposal in very real terms the money which the sale of the property title earns them, in order finally to set profit-making processes in motion. (Cf. Lohoff/Trenkle 2012: 131f.).
Moreover, fictitious capital is also to be considered as capital from the perspective of total capital or the overall economic process. Productivity gains through the use of new technologies raise expectations of higher profits in the future and lead to an increase in stock and asset values, while at the same time cost reductions achieved through the increase in productivity dampen inflation. If, in the face of subdued price developments, low-interest credit conditions initiated by central banks are added to this, this in turn can increase the demand for fictitious capital, which in turn spurs the growth of output and productivity as far as the development of profit rates allows.
Fictitious capital also inheres the representation of capitalist reality-ideas, perceptions, knowledge, and discourses that do not result from the opinions and ordinary conceptions of actors, but arise from the social and economic relations of capital itself. Here, the ideological representation that John Milios always associates with Marx` theory of fetishism does not represent a subjective phenomenon based on illusions, beliefs, and opinions; rather, it refers to an economic reality mediated by economic objects and their relations. (Cf. Sotiropoulos/Milios/Lapatsioras 2013 a: 148f.) In this respect, these are objective perceptions that keep the economy and the class structure essentially opaque while calling for a mode of behavior and actions adequate to capital, which are absolutely necessary for the effectiveness of capitalist power relations. In this context, financial markets today play an active role in the organization of social power relations. Thus, capitalization always implies strategies of valuation, which are the result of certain “representations” of the economy based on risks. Thus, the interpretation of companies’ fundamentals is not even imaginable without this kind of “ideological” representation. The multiple economic-technical-political events that emerge from the companies themselves are converted into objective perceptions and quantitative signs (a-significant semiotics) in the money and capital markets. Moreover, the financial system today usurps the representation and quantification of social power relations and thus the everyday lives of people. There is no need to tie these facts at all to the debates about models, which are almost exclusively about the effectiveness of information, about whether or not market participants are capable of correctly capturing an essential part of observed reality (fundamental data). Proponents and opponents of these models share the thesis that it is always about relations between the observing subjects (market participants) and the observed objects (reality). The subject is understood as external to reality and reality appears as completely transparent. The dispute ultimately arises solely over whether market participants have the capacity to use useful information and how it influences their decisions. Marx’s position radically breaks with this anthropological and at the same time empiricist perspective. For Marx, the observing subject is always already involved in and dominated by the suprapersonal economic relations of capital, by the objective forms of the existing complexes of capitalist power relations, and this quite independently of the quality and usefulness of the available information. (Ibid.) In the Grundrisse, Marx writes: “Society does not consist of individuals, but expresses the sum of the relations, relationships, in which these individuals stand to each other.” (MEGA II/1.1: 188) Society, that is, the economy, is not constituted by individuals, but, according to Marx, expresses the sum of the relations in which individuals exist. The relations are not presented here as transcendent, but as immanent with respect to the terms.
1 Two straight lines running parallel have (as a common property) the same direction, this scheme being the abstraction definition as introduced into mathematical logic by the mathematician Guiseppe Peano in 1894. (Cf. Schlaudt 2011: 265) It was Bertrand Russell who succinctly expressed this formalization using the terms of set theory: “The number of a set is the set of all sets equivalent to it.” (Russell 1960: 55/56) For Marx, commodity values are represented as qualitatively equal insofar as they can be measured in money, and thus they are also quantitatively comparable. (MEW 23: 109) That the expression of value is to be understood as a nonsensical property of the relations in the relation of equality (by which it does not imply an external relation vis-à-vis the relations, but rather explicates an internal relation) is justified by Oliver Schlaudt with recourse to a scholastically inspired definition of abstraction: the abstraction of value, as a determination of relation, always refers to a pair of concepts, whereby that which is abstracted, namely value, and that from which abstraction is made are related to each other. (Schlaudt 2011: 266)
2 The further functions of money, such as means of payment, store of value, treasure, etc., are then “derived” from this. With money as a means of payment, the price of the commodity is realized as a promise to pay. Money redeems the promise of payment.
3 A distinction must be made here between forms of money and capital – money as a general equivalent and money as capital – and other money functions. Money is considered beyond the measure of values and as a means of circulation (in relation to time and quantity) also as a means of payment, giro money, central bank money etc. and from this follow problems such as indebtedness, fluctuations in the value of money and treasury formation.
4 In this context, all types of labor that produce surplus value are classified as productive – they are exchanged for variable capital and generate profit for capital. All forms of labor that are not exchanged for variable capital are considered non-productive, such as reproductive labor in private households that is for one’s own consumption; labor that is not exchanged for capital but for private income; employees in the state apparatus who do not sell goods or services; self-employed workers who sell goods without surplus value, etc. We also assume the existence of machine surplus value, which we discussed in detail in Capitalization vol.1. (Szepanski 2014a: 302f.)
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