The distinctive characteristic of the commodity economy is that the managers and organizers of production are independent commodity producers (small proprietors or large entrepreneurs). Every separate, private firm is autonomous, i.e., its proprietor is independent, he is concerned only with his own interests, and he decides the kind and the quantity of goods he will produce. On the basis of private property, he has at his disposal the necessary productive tools and raw materials, and as the legally competent owner, he disposes of the products of his business. Production is managed directly by separate commodity producers and not by society. Society does not directly regulate the working activity of its members, it does not prescribe what is to be produced or how much.
On the other hand, every commodity producer makes commodities, i.e., products which are not for his own use, but for the market, for society. The social division of labor unites all commodity producers into a unified system which is called a national economy, into a "productive organism" whose parts are mutually related and conditioned. How is this connection created? By exchange, by the market, where the commodities of each individual producer appear in a depersonalized form as separate exemplars of a given type of commodity regardless of who produced them, or where, or in which specific conditions. Commodities, the products of individual commodity producers, circulate and are evaluated on the market. The real connections and interactions among the individual - one might say independent and autonomous - firms are brought about by comparing the value of goods and by exchanging them. On the market society regulates the products of labor, the commodities, i.e., things. In this way the community indirectly regulates the working activity of people, since the circulation of goods on the market, the rise and fall of their prices, lead to changes in the allocation of the working activity of the separate commodity producers, to their entry into certain branches of production or their exit from them, to the redistribution of the productive forces of society.
On the market, commodity producers do not appear as personalities with a determined place in the production process, but as proprietors and owners of things, of commodities. Every commodity producer influences the market only to the extent that he supplies goods to the market or takes goods from it, and only to this extent does he experience the influence and pressure of the market. The interaction and the mutual impact of the working activity of individual commodity producers take place exclusively through things, through the products of their labor which appear on the market. The expansion of farmland in remote Argentina or Canada can bring about a decrease of agricultural production in Europe only in one way: by lowering the price of agricultural products on the market. In the same way, the expansion of large-scale machine production ruins a craftsman, making it impossible for him to continue his previous production and driving him from the country to the city, to the factory.
Because of the atomistic structure of the commodity society, because of the absence of direct social regulation of the working activity of the members of society, the connections between individual, autonomous, private firms are realized and maintained through commodities, things, products of labor. "...The labor of the individual asserts itself as a part of the labor of society, only by means of the relations which the act of exchange establishes directly between the products, and indirectly, through them, between the producers" (C., I, p. 73). Due to the fact that individual commodity producers, who perform a part of society's total labor, work independently and separately, "the interconnection of social labor is manifested in the private exchange of the individual products of labor" (Marx in his letter to Kugelmann) [1]. This does not mean that a given commodity producer A is only connected by production relations to given commodity producers B, C and D, who enter with him into a contract of purchase and sale, and is not related to any other member of society. Entering into direct production relations with his buyers B, C and D, our commodity producer A is actually connected, by a thick network of indirect production relations, with innumerable other people (for example, with all buyers of the same product, with all producers of the same product, with all the people from whom the producer of the given product buys means of production, and so on), in the final analysis, with all members of society. This thick network of production relations is not interrupted at the moment when commodity producer A terminates the act of exchange with his buyers and returns to his shop, to the process of direct production. Our commodity producer makes products for sale, for the market, and thus already in the process of direct production he must take into account the expected conditions of the market, i.e. he is forced to take into account the working activity of other members of society, to the extent that it influences the movement of commodity prices on the market.
Thus the following elements can be found in the structure of the commodity economy: 1) individual cells of the national economy, i.e. separate private enterprises, formally independent from each other; 2) they are materially related with each other as a result of the social division of labor; 3) the direct connection between individual commodity producers is established in exchange, and this, indirectly, influences their productive activity. In his enterprise each commodity producer is formally free to produce, at will, any product that pleases him and by any means he chooses. But when he takes the final product of his labor to the market to exchange it, he is not free to determine the proportions of the exchange, but must submit to the conditions (the fluctuations) of the market, which are common to all producers of the given product. Thus, already in the process of direct production, he is forced to adapt his working activity (in advance) to the expected conditions of the market. The fact that the producer depends on the market means that his productive activity depends on the productive activity of all other members of society. If clothiers supplied too much cloth to the market, then clothier Ivanov, who did not expand his production, did not thereby suffer less from the fall of cloth prices, and he had to decrease his production. If other clothes introduced improved means of production (for example, machines), lowering the value of cloth, then our clothier was also forced to improve his production technology. The separate commodity producer, formally independent from others in terms of the orientation, extent and methods of his production, is actually closely related to them through the market, through exchange. The exchange of goods influences the working activity of people; production and exchange represent inseparably linked, although specific, components of reproduction. "The capitalist process of production taken as a whole represents a synthesis of the processes of production and circulation" (C., III, p. 25). Exchange becomes part of the very process of reproduction or the working activity of people, and only this aspect of exchange, the proportions of exchange, the value of commodities, is the subject of our research. Exchange interests us mainly as the social form of the process of reproduction which leaves a specific mark on the phase of direct production (see below, Chapter Fourteen), not as a phase of the process of reproduction which alternates with the phase of direct production.
This role of exchange, as an indispensable component of the process of reproduction, means that the working activity of one member of society can influence the working activity of another only through things. In the market society, "the seeming mutual independence of the individuals is supplemented by a system of general and mutual dependence through or by means of the products" (C., I, p. 108). Social production relations inevitably take on a reified form - and to the extent that we speak of the relations between individual commodity producers and not of relations within separate private firms - they exist and are realized only in that form.
In a market society, a thing is not only a mysterious "social hieroglyphic" (C., I, p. 74), it is not only "a receptacle" under which social production relations among people are hidden. A thing is an intermediary in social relations, and the circulation of things is inseparably related to the establishment and realization of the productive relations among people. The movement of the prices of things on the market is not only the reflection of the productive relations among people; it is the only possible form of their manifestation in a market society. The thing acquires specific social characteristics in a market economy (for example, the properties of value, money, capital, and so on), due to which the thing not only hides the production relations among people, but it also organizes them, serving as a connecting link between people. More accurately, it conceals the production relations precisely because the production relations only take place in the form of relations among things. "When we bring the products of our labor into relation with each other as values, it is not because we see in these articles the material receptacles of homogeneous human labor. Quite the contrary: whenever, by an exchange, we equate as values our different products, by that very act, we also equate, as human labor, the different kinds of labor expended upon them. We are not aware of this, nevertheless we do it" (C., I, p. 74). Exchange and the equalization of things on the market bring about a social connection among the commodity producers and unify the working activity of people.
We consider it necessary to mention that by "things" we mean only the products of labor, just as Marx did. This qualification of the concept of "thing" is not only permissible, but indispensable, since we are analyzing the circulation of things on the market as they are connected with the working activity of people.We are interested in those things whose market regulation influences the working activity of commodity producers in a particular way. And the products of labor are such things. (On the price of land, see below, Chapter Five.)
The circulation of things - to the extent that they acquire the specific social properties of value and money - does not only express production relations among men, but it creates them. [2] "By the currency of the circulating medium, the connexion between buyers and sellers is not merely expressed. This connexion is originated by, and exists in, the circulation alone" (C., I, p. 137). As a matter of fact, the role of money as a medium of circulation is contrasted by Marx with its role as a means of payment, which "expresses a social relation that was in existence long before" (Ibid.). However, it is obvious that even though the payment of money takes place, in this case, after the act of purchase and sale, namely after the establishment of social relations between the seller and the buyer, the equalization of money and commodities took place at the instant when the act took place, and thus created the social relation. "[Money] serves as an ideal means of purchase. Although existing only in the promise of the buyer to pay, it causes the commodity to change hands" (C., I, p. 136).
Thus money is not only a "symbol," a sign, of social production relations which are concealed under it. By uncovering the naivete of the monetary system, which assigned the characteristics of money to its material or natural properties, Marx at the same time threw out the opposite view of money as a "symbol" of social relations which exist alongside money (C., I, p. 91). According to Marx, the conception which assigns social relations to things per se is as incorrect as the conception which sees a thing only as a "symbol," a "sign" of social production relations. The thing acquires the property of value, money, capital, etc., not because of its natural properties but because of those social production relations with which it is connected in the commodity economy. Thus social production relations are not only "symbolized" by things, but are realized through things.
Money, as we have seen, is not only a "symbol." In some cases, particularly in the commodity metamorphosis C-M-C, money represents only a "transcient and objective reflex of the prices of commodities" (C., I, p. 129). The transfer of money from hand to hand is only a means for the transfer of goods. In this case, "Its functional existence absorbs, so to say, its material existence" (C., I, p. 129), and it can be replaced by the mere symbol of paper money. But even though "formally" separated from metallic substance, paper money nevertheless represents an "objectification" of production relations among people. [3]
In the commodity economy, things, the products of labor, have a dual essence: material (natural-technical) and functional (social). How can we explain the close connection between these two sides, the connection which is expressed in the fact that "socially determined labor" takes on "material traits," and things, "social traits"?
[1] Karl Marx and Frederick Engels, Selected Works, Volume II, Moscow: Foreign Languages Publishing House, 1962, p. 461.
[2] The way this social property of things, which are expressions of production relations among people, takes part in the creation of production relations among particular individuals, will be explained below, in Chapter 3.
[3]
One cannot agree with Hilferding's conception that paper money does away with the "objectification" of production relations. "Within the limits of a minimal quantity of means of circulation, the material expression of social relations is replaced by consciously regulated social relations. This is possible because metallic money represents a social relation even though it is disguised by a material shell" (R. Hilferding, Das Finanzkapital, Wien: Wiener Volksbuchhandlung, 1910). Commodity exchange by means of paper money is also carried out in an unregulated, spontaneous, "objectified" form, as is the case with metallic money. Paper money is not a "thing" from the point of view of the internal value of the material from which it is made. But it is a thing in the sense that through it are expressed, in "objectified" form, social production relations between buyer and seller.
But if Hilferding is wrong, then the opposite view of Bogdanov, who holds that paper money represents a higher degree of fetishism of social relations than metallic money, has even less foundation. Bogdanov, Kurs politicheskoi ekonomii (Course in Political Economy), Vol. II, Part 4, p. 161.