If you read the news, there’s all this reporting on how there’s no money for … , whatever it may be, and that there’s barely money for … , if taxation is adjusted, this way and/or that. This is fascinating, considering that there’s just more and more of it, all the time, and none of that money really disappears from the system. It’s all somewhere. It might not all be in circulation, but it is somewhere.
The discussion then turns to those adjustments. How much people need be taxed for … and how much they need to contribute otherwise to … and … in addition to taxation. For example, currently this discussion is about how there are fewer and fewer young people and more and more elderly people, for the simple reason that people had more children back in the day than they have these days. The younger people have to pay more taxes, namely in the form of income taxes and pension fund contributions, so that the older generations can have services and pensions. The younger people are upset that they can’t afford just about anything, yet they are expected to pay also for the older people. This discussion then degenerates to the younger and poorer people pointing fingers at the older and richer people.
So, there’s money in the system, it’s just not there, for the people. But who has the money? Well, it’s not the children, nor the young people, nor the working age people, nor the elderly. Some of them might be poorer or richer than others, but, overall, no of them are rich, inasmuch as they get by in life by working or by being supported by others who work through some form of social security. What’s common between them is that none of them are actually rich, yet they tend to think otherwise and quickly start pointing fingers at one another. To be rich, like truly rich, means that you do not work at all and the not rich people point fingers at each other, the better. They like nothing more better than people squabbling with one another.
Now, that’s just my take and you’d be right to point that out. The thing is that that’s also Karl Marx’s take. The strange thing is that people aren’t aware of that. Oh, and that includes most academics as well, including those in economics, which makes it even stranger.
What does Marx have to say about that then? Well, take a look at chapter four of part two of the first volume of his magnum opus, ‘Capital’, titled ‘The Transformation of Money into Capital’ and you’ll be quick to learn what he has to say about this. You’d think it’s be more difficult to understand it, but no, it’s not.
Right, so, Marx (146-148) points to two ways of thinking. Both of them involve commodities (C) and money (M). The first way of thinking is the one that is familiar to most people, for the simple reason that they live their lives that way. There are these commodities, which are turned to money, which is turned into commodities. That’s his C—M—C formula. You sell something, whatever that may be, in order to buy something. Now, that something could be something concrete, like a product, that someone has made. It is sold by its maker who then makes money. That money is then used by its maker to buy what is need to make that happen again, as well as to pay for all the living costs (rent or maintenance costs, food, heating, electricity, water etc.). Money is made to be spent. It’s about making it in life and then, perhaps, if you make more than enough, about enjoying life. The second way of thinking inverts the terms. This way of thinking is not familiar to most people, for the simple reason that most people don’t think this way, for the also simple reason that it’s not about making it in life, nor about enjoying life. Money is made to make more money, which is made to make even more money. It’s all about the money and, to be precise, everything is to be thought of as a means to an end, which is making money. This is his M—C—M formula.
Now, of course, that money is not just like some coins or bills or numbers on a sheet of paper or on its electronic equivalent. He’s (147) very clear about this: money is just money in the C—M—C circuit, whereas money is capital in the M—C—M.
It’s also important to realize that money and commodities are part of both circuits. Money comes and goes, as do commodities. However, that’s not the thing that’s interesting about these circuits. In both cases, what matters is the underlying way of thinking. As specified by him (147), C—M—C, what most people are used to, involves people spending money on something, whereas M—C—M, what most people are not used to, involves advancing money. Another way of putting that is thinking the former as money is spent on something, which means that it has use-value, and the latter as exchange-value, as recognized by him (147-148).
Now, what interests me is not the circulation of money, as such, as money or as capital. What interests me about this are the underlying ways of thinking.
Most people see money as just as means to an end. This is where the notion of consumption comes in, as he (148) points out. To be clear, it’s not to be understood as something negative. It’s like, you need to eat to stay alive. It can be understood as something negative, inasmuch, others take advantage of that necessity, that one has to consume. That’s why people are these days often called consumers and also blamed for it, even though that’s just how it is, as Baruch Spinoza would probably also explain it.
Most people do not think that they need to make money in order to make more money. To be clear, they may realize that making money to make more money means that they’ll then have more money, but, even then, that’s, ultimately, for the sake of spending that money. So, even then, being rich is about having money to spend money. It’s like when you have people who make a lot of money and who spend a lot of money, because they like what money can be used for. They are happy with. They get more than they need. They can enjoy life. This could be your doctor or your lawyer, or even your landlord or your executive. They typically get paid well for their work, but this is not really about whether they earnings or capital gains. Instead, it’s about the way the people think. You can be landlord or own stocks. That’s fine. That’s not the deal here. They end up using that money, just like the people who barely make a living, like working as a cashier or on a production line in a factory. They do make more money, yes, but the underlying thinking is the same. They make money in order to spend that money. Oh, and no, it’s not about making money, like a certain amount, and then spending all that money. A lot of people save money and invest money, like those landlords and stockholders. Again, it’s the mindset that matters.
There are, however, people, a tiny minority of people, who think otherwise. For them, it’s all about the money. It’s end all, be all, as recognized by Marx (148). Most people do not think this way, because … well … it’s not just strange, but also obsessive. Just think of it. You have money, this or that amount, the sum doesn’t really matter, and you are only willing to spend it if it means that you’ll get more of it. Then once you have more of it, you are, again, only willing to spend it if means that you’ll get more of it. The strangeness and obsessiveness of this has to do with how there’s that everything else in the mix, all those commodities and their consumption, but it doesn’t any value of its own. It’s like you don’t enjoy life. It’s like you invite someone to a fancy restaurant, at your expense, no, not to enjoy the food and the company, but in hopes of making that person help you make more money, because that’s what you truly enjoy.
To specify things a bit, this is also not about having things and not having things. Why? Well, commodities are simply a way of understanding this, concretely. There are all these things and they matter a great deal, but what also matters and what cannot be ignored is how those things come to be those things. Sure, there are some things that come to being, with or without humans, like whatever other forms of life come to produce, but that’s not the point here. Instead, the point is that humans make things. That’s work, or, to be more precise, labor for you. Things are just the embodiment of that labor, as he (148) puts it, or its manifestations or materializations. This also makes sense, considering that people not only buy goods, but also services.
This leads me back to how we end up in a situation where there’s not enough money for … and/or … and how it is of little use to point fingers at others. People tend to think that there’s money to be made and money to be spent, that’s the C—M—C formula, but what they ignore is that because there’s people who think otherwise, that’s the M—C—M formula, not all that money remains in circulation, even if more money is made, like all the time.
Marx (149) is very adamant about this. So, to be precise, C—M—C formula involves money, like let’s say a 100 euros, to use the sum he uses (149), and, by the end of the day, it’s still money, that 100 euros. That’s the case when someone sells something for 100 euros and then buys something for 100 euros. Money keeps circulating. That’s not the case with the M—C—M formula. The idea is that the 100 euros ends up being 110 euros by the end of the day. That 10 euros is then the excess, what’s commonly known as the surplus-value, as he (149) points out.
Now, that excess is not inherently problematic. As he (149) goes on to recognize, not all trades are equal like someone making 100 euros on something and then spending 100 euros on something, or vice versa. Sometimes someone indeed makes 100 euros and only spends 97 euros. Some money is saved, but it doesn’t really remain out of circulation. The person may make another 100 euros the next day, only to have to spend 103 euros that day. That happens, as he (149) points out.
The problem with the M—C—M formula, as a way of thinking, is that it’s all about withdrawing money from circulation, as he (149) points out. It’s all about hoarding it. Sure, some money goes back to circulation, but that’s conditional to it making more money that is then to be withdrawn from circulation, so that more money will be withdrawn from circulation than would have been withdrawn from the circulation if that money had not been put to circulation. In other words, money is only ever spent to make more money and to withdraw more of it from circulation.
To be clear, this is not literally about hoarding money somewhere, out of circulation, but about a mentality of hoarding money, because it’s all about the money. There’s never enough of it. Sitting on it doesn’t make you more money, hence it’s not the case that someone literally sits on money, hoarding it away from circulation.
Then again, I think it’s important to point out that if you have enough money, like millions of dollars, euros or pounds, you can just do nothing with the money and still be making money, even while you spend some of that money. If you have a ton of money in a bank account, the bank pays interest for it to be on that bank account, and if the income from the interest is higher than you spend, you end up making more and more money in the process.
Now, of course, if you have a ton of money in your bank account, it’s not just there, like piles of cash or gold bars just sitting in a vault. That bank is actually using your money to make money and the money you get from them is a cut from the money they make. Okay, it’s a bit more complicated than that, but, yeah, that’s the gist of it. It’s not really out of circulation.
The interesting thing about this is that the underlying idea of M—C—M formula is to withdraw more and more money from circulation, by putting it into circulation. So, again, to go back to the start, it’s not that there’s somehow less money in the system, nor that’s there’s less of it in circulation, even though that can be the case, but rather that it keeps ending up in certain places. So, one needs to ask questions like: who has that money, who puts that money into circulation and why they put that money into circulation? In other words, what matters is not money or capital, as such, but rather how that money or capital flows, how it accumulates and concentrates, and how these accumulations and concentrations of money or capital affect the flows of money or capital.
This may seem like this is not connected to landscape, nor to discourse, but it is. The way things are and also as they appear in the landscape cannot be disconnected from the ways people think, hence the importance of discourse, and the flows of money or, especially in the form of capital, do influence, if not define what appears in this and/or that landscape and why it appears in it or them.
References
- Marx, K. ([1867/1890] 1954). Capital: A Critical Analysis of Capitalist Production (F. Engels, Ed., S. Moore and E. Aveling, Trans.). Moscow, Soviet Union: Progress Publishers.