Literature Study GuidesCapital Das KapitalVol 1 Part 1 Chapters 2 3 Summary

Capital (Das Kapital) | Study Guide

Karl Marx

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Capital (Das Kapital) | Vol. 1, Part 1, Chapters 2–3 : Commodities and Money | Summary



Chapter 2: The Process of Exchange

Marx opens Chapter 2 with a reminder that commodities are just items and cannot take themselves to market. They need human beings to place them in relation with one another and take guardianship of them. This act of recognizing the "guardianship" of another person over commodities is how Marx introduces the concept of private property. To its owner, Marx goes on to explain, a commodity has no use-value, but only an exchange-value. The owner is putting his commodity on the market because he doesn't need it, but he does have a need for another commodity, and thus makes the exchange.

The movement of a society toward more commercial interaction creates a need for money, which Marx claims represents an "independent form of value." This creates a different system: instead of commodities exchanged for other commodities, money is being exchanged for commodities. This moves away from a system of simple exchange of items, because a second element is being introduced: the money-form. Marx explains that money can actually take many forms, because as the universal "Value-Form" it is simply whatever type of item a given society chooses to use (cattle, gold, fruit, etc.). This commodity then takes on two values: its original use-value as a commodity (Marx gives the example of gold being used to fill teeth or produce luxury items) and its universal use-value, which arises from a "specific social function."

Chapter 3: Money, or the Circulation of Commodities

Marx proposes to use gold as the standard example for money in the following chapter for the sake of simplicity. In this first section of Chapter 3 Marx explains that money can only measure value in an imaginary sense. As briefly touched upon at the end of Chapter 2, money has no inherent value outside of its use-value: it is given an imaginary value by society in order to barter it for actual commodities. Money also has two different functions. First, it functions as a measure of value, as it works as a representation of human labor within a society. Second, it functions as a standard of price as "a quantity of metal with a fixed weight."

Marx proposes that gold, as a standard of money, has a value that is relative to itself. The value of the metal itself may go up or down, but 12 ounces of gold is still worth 12 times as much as one ounce. Thus, once a standard of money is set, though the material might fluctuate in value, its worth in the market stays constant. Marx elaborates on the relationship between commodities, money, and value, explaining that the value of a commodity rises "when the value of money remains constant," while money falls in value "when the values of commodities remain constant." Marx makes a further distinction between price and value. While value has previously been thoroughly discussed and defined, the author now proposes that price refers simply to the quantity of gold needed to exchange for a commodity and is therefore a manifestation of the labor-value of gold.

Marx proposes to create a space in which can co-exist the previous contradictions that arose from the defining of commodity-value. The process of commodities moving from someone to whom they have no use-value to a person for whom they do have use-value he calls social metabolism. When the concept of money enters the scene, Marx illustrates the full exchange produced as C-M-C, or "commodity-money-commodity." In this process a person exchanges for money a commodity with no use-value to them. They then exchange the money for a commodity that does have use-value to them. This is called the "metamorphosis of commodities."

This movement of commodity to money back to commodity, and so on, is a circuit. It forms the basis for the circulation of money. When a commodity is purchased and money moves from the buyer to seller, that commodity is taken out of circulation and becomes an object of consumption. Money, however, always can be considered in circulation. Marx explains that with the fluctuation in the prices of commodities, "it follows that the quantity of money in circulation must fall or rise to the same extent." He vehemently strikes down the idea that the prices of commodities are set by how much commodity is in circulation, and that the quantity of commodities in circulation is determined by the amount of money a country has. Instead, he argues that how much of a commodity is in circulation depends on the total of the "prices of the commodities in circulation, and the average velocity of the circulation of money."

Marx explains how the coin functions as the main form of money and is different from gold bullion only in physical shape. Gold is used as a universal currency, and its relationship to the commodity is measured in the form of its weight. Paper money, becoming a step more abstract, simply represents the gold that exists. It is a symbol of money and of value. The paper itself is worthless, and its circulation and worth in relation to gold are established by the state.

Section 3 continues to expound on the concept of money. Marx explains that sometimes money can become the object of desire itself, and instead of being exchanged for commodities it is hoarded, thus breaking the C-M-C cycle. Wealth can itself become a form of power, because if someone has hoarded money, they do not need to sell a commodity in order to purchase one. Marx claims that for the hoarder, "to sell much and buy little is the sum of his political economy."

Marx also explains the foundations of the concept of simple credit. Sometimes commodities are bound to seasons or other external factors that cause them to be available only at certain times. In this situation Marx says that "one commodity-owner may therefore step forth as a seller before the other is ready to buy." This creates a situation in which something might be bought on credit, before the buyer has sold his own commodity and obtained the money to purchase. The introduction of credit and debt into an economy takes the economy away from a simple commodity-money exchange, because money becomes the subject of contracts and repayment. In this way money gains more inherent power as it becomes the purpose of the sale. Money becomes the only commodity, and the use-value of actual commodities is lost.

On the world scale both silver and gold are used as currencies. Marx explains that world money functions not only "as the universal means of payment [and] purchase" but also "as the absolute social materialization of wealth as such (universal wealth)." Countries need two different reserves: one for their own internal market, and one for the world market. Money spreads outward from countries into other countries, where it is absorbed into internal markets to then spread outward again.


In Chapter 2 Marx sets up the concept of commodities, value, and exchange in the context of human relationships and social structure. In Chapter 1 his focus was primarily on the objects, or commodities, themselves. In this chapter he sets the commodity in the context of human society and re-examines it through this lens. Right away in this chapter Marx makes note of a contradiction that has arisen in his definition of value. He states, "commodities must be realized as values before they can be realized as use-values." But then he goes on to say that it's equally true that commodities "must stand the test as use-values before they can be realized as values." On one hand, commodities must be put on the market and seen in relation to one another (i.e., exchanged for one another) before they can be consumed or used. On the other hand, commodities only have a value if the items are useful to others. In the end both use-value and exchange-value must be taken into account to determine the worth of a commodity.

Much of the beginning of Chapter 3 focuses on different ways of elucidating one primary point: that money can only measure the value of a commodity in an imaginary way. This is touched upon in the last few pages of Chapter 2, but Marx examines the logic behind this concept thoroughly in the first section of Chapter 3. Generally, his approach in these early chapters is to thoroughly break down the most basic economic concepts—commodities, value, and money—in as much detail as possible to create a solid foundation for the rest of his theories throughout the text.

The second section of Chapter 3 is driven by a focus on the concept of money and its basic method of functioning in the market. Marx explains the exchange of commodities for money, which is then exchanged for commodities, as a circuit and a metamorphosis. He seems unimpressed with the idea of money, however. In sentences like, "The circulation of money is the constant and monotonous repetition of the same process," the reader gets the impression that Marx is disdainful toward the presence of money in the commodity market. This is to be an underlying thread in his treatment of the capitalist economy in general. Marx's overall approach to explaining the basic functions of money in this chapter is to repeat the same concepts using slight variations in metaphor and examples. This connects to Marx's approach to the first section of the chapter, where he continues defining the basic elements of the market by setting up many different variations of similar situations.

Marx begins to take some jabs at capitalists and other economists, using language such as "the absurd hypothesis adopted by the original representatives of this view" to refer to people whose theories he disagrees with. These asides prove to be some of the more interesting and engaging insights into Marx's opinions about the material he is discussing.

Finally, in the third section of Chapter 3, Marx looks more carefully at the concept of money and the problems that may arise with it. He views hoarding as one of the worst problems that comes about with money. In his eyes someone who sells his commodities and doesn't put the money right back into circulation finds his money "petrified into a hoard, and the seller of commodities becomes a hoarder of money." This "hoarding" can be connected back to the concept of the "fetish" that Marx claims people develop for commodities or money.

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