Karl Marx. Capital Vol One Ch3 Sec2

The medium of circulation

a. The metamorphosis of commodities

Commodities exchange with money and that money can be exchanged for other commodities. Marx gives the example of a weaver who makes linen to convert to money to buy a bible.

Division of labor is brought up rather quickly. Since the weaver is not the sole maker of linen, the amount of gold he can exchange the linen for can only be realized when he goes to the market which will aggregate all of the linen sold and the price will be determined by the total amount of linen produced by all the weavers.

Marx rapidly notes that the relationship between the weaver's linen is quirky. The goal of the weaver is to buy a bible. He makes the linen which has value but does not barter the linen directly for the bible. He converts it to money and the money to the bible. But realistically the weaver is bartering for the bible in an extended way.

Something bought is also something that can be sold. Marx is quick to this point. The weaver now has a bible. He does not know how to make a bible but can sell it just the same as the linen he produced. And Marx spends a good amount of time on this cycle of buying and selling and then buying again.

He seems to assume that capitalism requires one to keep buying and selling one's goods. What I mean is that he said if someone purchases something for the sake of consumption, it breaks this cycle of buying and selling. This he says creates crises.

He foreshadows that type of circulation discussed so far is simplistic and as time goes on with these exchanges you will see the exchanges are not as tidy as the simplistic example. The main culprit he points to is this back and forth between physical and abstract account of a commodity.

b.

Currency is like electric current or the current of water. In Capitalism currency is the flow of buyers to sellers and sellers to buyers. The currency of commodities can go in phases when either there is a surplus of commodities or money. The rate that trade takes place also effects the currency of commodities.

c.

Gold is represented into coins and paper money. Although they may not be gold themselves they represent gold. One can not be sneaky and print more money than gold because even it the money says it represents a certain amount of gold, it will just be a ratio to the gold available.

Coins and paper money are also a good way to keep currency moving as they are meant to be exchanged quickly. Basically to be giving the slightest thought in the exchange for one commodity to another. Almost as if the money was somehow embedded in the trade itself rather than an actual thing.