Gold after the death of Marxism: A reply to George Caffentzis

by Jehu

This post is in response to a question posed to me on regarding George Caffentzis’s essay, Marxism after the Death of Gold:

“You’ve probably read this, and may have already addressed it on your blog, but in case you haven’t, I’d appreciate your thoughts.”

I am familiar with the essay in question and have written about it before. But I will return to it to provide an answer that takes into account my personal theoretical development since that time.


9547247-making-money-with-your-computerGeorge Caffentzis does something in his essay that Marxists occasionally (all too often?) do: Completely and baldly lie about Marx’s theory. This essay is founded on a lie that Caffentzis knows or should know is a lie. And the case does not look good here: Either Caffentzis does not know the premise of his essay is a lie and is therefore unqualified. Or he know it is a lie and is not to be trusted because his knowing distortion of Marx’s argument clearly has an agenda.

Caffentzis premise is stated thus:

“Marx clearly argues that gold is necessary for the functioning of capitalism”.

I can find no statement in Marx’s writings to this effect, nor even a statement of Marx’s Caffentzis might be paraphrasing. This is typical of Marxists: they just invent some shit out of whole cloth and drape it over Marx as if it his argument.

While money is by nature gold, capital is the production of surplus value, or profit. Not only did Marx not say gold is necessary to the functioning of capitalism, he appears to predict capitalism eventually kills off money.

This is my reading of Marx’s famous prediction in the Grundrisse stating technological improvements in the production of commodities would eventually lead to the collapse of production on the basis of exchange value:

“The theft of alien labour time, on which the present wealth is based, appears a miserable foundation in face of this new one, created by large-scale industry itself. As soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure, and hence exchange value [must cease to be the measure] of use value. The surplus labour of the mass has ceased to be the condition for the development of general wealth, just as the non-labour of the few, for the development of the general powers of the human head. With that, production based on exchange value breaks down, and the direct, material production process is stripped of the form of penury and antithesis.”

In Capital, volume one, exchange value is presented by Marx as the phenomenal form of appearance of value, and it is ultimately expressed in the form of a money commodity. Marx typically used gold as his money commodity — not because it served this function exclusively (China, for instance, used silver in this function), but because he thought it to be the commodity most suited to that function.

When Marx’s predicts the break down or collapse of production on the basis of exchange value, this has obvious implications for a money commodity precisely because this commodity is the material in which the values of commodity are expressed in the circulation of commodities. All other commodities are expressing their values in the form of some definite quantity of the money commodity.

Marx, to my reading, is suggesting that the values of commodities will no longer serve as the basis for production of use values. As soon as the production of use values is mainly the product of labor in its indirect form, the labor time of these commodities can no longer be the measure of their use values. And if labor time can no longer be the measure of use value, money itself becomes obsolete.

Now, as far as I know, I’m alone in making this argument, because I’m alone in suggesting the transformation problem is a real contradiction. Marx is predicting a real event here: the collapse of production on the basis of exchange value, i.e., the breakdown of production on the basis of a system where use values are measured by their labor times (values). The “phenomenal form” of the labor times of these commodities is, of course, their exchange value, which must, in the final analysis, be a commodity money.

Far from assuming capitalism requires a commodity money, Marx assumes capitalism ultimately is incompatible with commodity money. A commodity money is necessary to serve as an expression of the values of commodity, but what if this expression runs into contradiction with capital itself?

Now, as I understand it, in 1971 Marxists did not have this passage from Marx from the Grundrisse. Martin Nicholas only translated it into English in 1973. And it was only just beginning to come into circulation among Marxists and a lot of new insights into Marx’s thinking were available for the first time. It is entirely possible that no one really grasped the implications of this passage for money as a category within labor theory.

Leaving all of that aside, however, and giving the benefit of doubt to the Marxists of that period, it is still quite staggering that between Engels’ death and today no one has yet grasped the implication of the transformation problem. Simply stated: The transformation problem is the form this same passage takes in Capital, volume three. The transformation problem suggests there is a real contradiction between capitalism — i.e., the production of surplus value, and simple commodity production, i.e., production on the basis of exchange value. This contradiction, if taken to its logical end, means the collapse of production on the basis of exchange value.

Now where might the contradiction between the production on the basis of exchange value and the production of surplus value finds its most antagonistic expression? Would it not be on the struggle between the two classes over division of the working day? The labor time during which the worker reproduces the value of her wages stands in absolute antagonism to the time she is required to provide unpaid labor.

Here the value of the commodity stands in its sharpest contradiction against the surplus value of capital.

And when might this contradiction between the two classes actually lead to the breakdown of production on the basis of exchange value? When, through development of the productive forces of capitalism, the rate of profit falls to zero. At that point, as Henryk Grossman explains, surplus value can only be created by buying labor power below its value. At a certain point in the development of the productive forces, writes Grossman,

“There is a growing shortage of surplus value and, under the given conditions, a continuous overaccumulation. the only alternative is to violate the conditions postulated. Wages have to be cut in order to push the rate of surplus value even higher. This cut in wages would not be a purely temporary phenomenon that vanishes once equilibrium is re-established; it will have to be continuous. After year 36 either wages have to be cut continually and periodically or a reserve army must come into being.”

At a certain point, then, labor power would no longer be purchased at its value, and production on the basis of exchange value will collapse.

As a matter of fact, all the evidence for decades has been pointing toward Marx’s prediction, but most Marxists have their own agenda: to demonstrate why capitalism will last forever unless overthrown by the proletarians.

Gold (commodity money generally) is and remains the only measure of value. We did not witness the death of gold in 1971, but the death of Marxism.