Capital: A Critique of Political Economy, Volume 3 by Karl Marx

Commodities, Exchange and Capital

A commodity is an object, external to ourselves, which by its properties in some way satisfies human wants. The utility of a thing constitutes its use-value. Use-values of commodities form the substance of all wealth, and also become the material repositories of exchange-value. The magnitude of the value of any article is determined by the labour-time socially necessary for its production. So the value of a commodity would remain constant if the labour-time required for its production also remained constant. But the latter varies with every variation in the productiveness of labour.

An article may have use-value, and yet be without value, if its utility is not due to labour, as in the case of air, or virgin soil, or natural meadows. If a thing be useless, so is the labour contained in it, for, as the labour does not count as such, it therefore creates no value. A coat is worth twice as much as ten yards of linen, because the linen contains only half as much labour as the coat. All labour is the expenditure of human labour-power in a special form and with a definite aim, and in this, its character of concrete useful labour, it produces use-values.

Everyone knows, if he knows nothing else, that commodities have a value form common to them all, and presenting a marked contrast with the varied bodily forms of their use-values. I mean their money form.

Every owner of a commodity wishes to part with it in exchange for other commodities, but only those whose use-value satisfies some want of his. To the owner of a commodity, every other commodity is, in regard to his own, a particular equivalent. Consequently his own commodity is the universal equivalent for all others. But, since this applies to every owner, there is, in fact, no commodity acting as a universal equivalent. It was soon seen that a particular commodity would not become the universal equivalent except by a social act. The social action, therefore, has set apart the particular commodity in which all values are represented, and the bodily form of this commodity has become the form of the socially recognised universal equivalent—money.

The first chief function of money is to supply commodities with the material for the expression of their values. It thus serves as a universal measure of value, and only by virtue of this function does gold, the commodity par excellence, become money. But money itself has no price. As the measure of value and the standard of price, money has two distinct functions to perform. It is the measure of value inasmuch as it is the socially recognised incarnation, of human labour; it is the standard of price inasmuch as it is a fixed weight of metal. As the measure of value it serves to convert the values of all the various commodities into prices or imaginary quantities of gold. As the standard of price it measures those quantities of gold.

The word pound was the money-name given to an actual pound weight of silver. When, as a measure of value, gold superseded silver, the word pound became, as a money-name, differentiated from the same word as a weight-name. The prices, or quantities of gold, into which the values of commodities are ideally changed are now expressed in the names of coins, or in the legally valid names of the subdivisions of the gold standard. Hence, instead of saying, "A quarter of wheat is worth an ounce of gold," the English would say, "It is worth £3 17s. 10½d." In this fashion commodities express by their prices how much they are worth, and money serves as money of account whenever it is a question of fixing the value of an article in its money-form. When Anarcharsis was asked for what purpose the Greeks used money, he replied, "For reckoning."

Every labourer in adding new labour also adds new value. In what way? Evidently, only by labouring productively in a particular way: the spinner by his spinning, the weaver by his weaving, the smith by his forging. Each use-value disappears, only to reappear under a new form in some new use-value. By virtue of its general character, as being expenditure of human labour-power in the abstract, spinning adds a new value to the values of cotton and spindle. On the other hand, by virtue of its special character, as being a concrete, useful process, the same labour of spinning both transfers the values of the means of production to the product and preserves them in the product. Hence at one and the same time there is produced a twofold result.

By the simple addition of a certain quantity of labour, new value is added, and by the quality of this added labour the original values of the means of production are preserved in the product. That part of capital which is represented by means of production, by the raw material, auxiliary material, and the instruments of labour, does not, in the process of production, undergo any quantitative alteration of value. I therefore call it the constant part of capital, or, more briefly, constant capital.

On the other hand, that part of capital represented by labour-power does, in the process of production, undergo an alteration of value. It both reproduces the equivalent of its own value, and also produces an excess, a surplus value, which may itself vary. This part of capital is continually being transformed from a constant into a variable magnitude. I therefore call it the variable part of capital, or, shortly, variable capital.