“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Saturday, February 13, 2010

Selling my promise to y to z: money, the universalizer of universal history

A good part of our intellectual apprenticeship is spent learning truths about the world that completely deny our experience. Sometimes, this is a good thing. The earth moves around the sun, who would have thought it! Sometimes, this is an ideological thing. Every philosophy freshman is duly impressed by the proof that altruism is actually an impossible ideal, since behind the act of a man of a man jumping in the river to save a stranger, one can find the flicker of the ego’s satisfaction with itself. What is rarely done is to turn the play of the cards and inquire if there is, in fact, any egotistic action at all – since, as we all know, our days are most organized by and for others. In this sense, egotism is a mere epiphenomena, and altruism, crushing altruism, is the very base and bread of our days. So why do we dwell, with such delight, on the ironic discoveries of the moralistes, without of course the saving irony? Because interest, self interest, has to be posited in order to make the capitalist machine work. We learn to demystify our motives in order to more thoroughly mystify our system.

Thus, the work of demystification turns out to be a more complex game than one expected. The career of Karl Marx is proof of this. It is rare that one man held so consistently, so desperately to the project of demystification – which is why one instinctively groups him with Nietzsche. Both, like the creature in Kafka’s Burrow, restlessly paced their own structures.

It is in terms of the burrow that I like certain of Marx’s texts above all others. Not just the brilliant political writing, but, as well, the notebooks. The Grundrisse. All commentators are agreed that the Grundrisse shows a Marx who has still not yet subdued the philosophical vocabulary to his plain work. And I must grant it is a little unfair to compare the notes, which perpetually retain the freshness of writing on the verge of one’s great themes, with the finished work, in which that freshness is subordinated to mastery. Marx is preeminently a maitre – Engels, that blessed spirit, understood this right away, irritated as he was, sometimes, by Marx’s tendency to excess.

I have been so entirely wrapped up, lately, in my editing work that I haven’t had the time I wanted to use Faust as my totem for Marx – my way of thinking through the metaphoric of transformations within the money/commodity nexus. And tomorrow and tomorrow and tomorrow, as I get older, start crowds me more and more – no matter how little sleep I get, I, like poor Faust, fall behind.

So: I wanted to make the connection between the organized and unorganized faces of freedom as Simmel sees them to Marx’s approach to money. The commentators say: there are two traditions concerning Marx’s theory of money. One is that he is, at root, a metallist – that, in order to make money as a commodity coherent with the labor theory of value, Marx is forced to mystify gold and silver as the universal types of money. The other is that the commodity theory leads him to see money primarily as a measure – and thus, puts him both in the camp of the nominalists and leads him to the same problem that the classical and neo-classical economists have – he can’t really distinguish the money economy from the barter economy. Or, as Ingham, the man who presses this critique the hardest, says, Marx missed the meaning of money-in-general because of his attachment to the labor theory of value. In an article in Economy and Society (2001), he sums up his desideratum like this:

“It is extremely important for the general analysis of money that the distinction between credit and credit-money is made clear from the outset. The new forms of money in question were not simple credit in the sense of deferred payment. Nor could they be adequately understood as direct symbolic ‘paper’ representations of precious metal, whether or not this was in coin or bullion form. Rather, these
first forms of credit-money were ‘money’ in the sense that mere ‘promises to pay’ circulated as means of settlement (payment). It was only later that they were backed by gold. I shall also contend that this negotiable (or transferable) debt – that is, ‘depersonalized’ debt that can be used as means of payment to a third party – is a form of money which is specific to capitalism.” (see Ingham 1999).

Later, in the same article, Ingham makes another neat point:

“Actually existing capitalism, as opposed to the ‘village fair’, was constituted by a new form of ‘dematerialized’ credit-money. From the early beginnings in late medieval Italy, state and bank debts – that is, their promises to pay – became accepted means of payment. In other words, debts could be discharged with a higher ‘quality’ form of debt that was trusted and/or enforced. This transformation
in the form of money required the signi. cant social structural change of the depersonalization and transferability of debt. It involved the transformation of a personalized bilateral debt relation (for example, an IOU) into the means of paying a third-party creditor (see Ingham 1999; Rowlinson 1999). A debt could be paid with another debt.20 It is precisely this fact – that money is constituted by a social relation of credit–debt – which mainstream economics, in its unremitting materialist preoccupation with the individual calculation of the utility of commodities, has found difficult to comprehend.”


Orthodox Marxists will tell you that Ingham is missing the fulcrum of capitalist history – abstract labor power – in this account. Myself, I think Ingham has the right intuitions about Marx’s formal model, but underestimates another theme in Marx – that of universal history. Universal history, in Marx’s hands, is not the history of unconvering the universals that really constitute mankind, but the history of the universalizing of mankind through force and the productive forces unleashed by capitalism –whch, remember, is represented in the Communist manifesto not just by free trade, but by World literature.

Marx prefigures Simmel in understanding barter and money in terms not just of their social relations, but in terms of different social circles. If I promise a friend to do x, because my friend has done y, I do not ‘sell’ my promise to my friend z – although one notices that, indeed, married couples, or long time couples, often tend to treat debts incurred by one of them as fungible enough to be ‘paid’ by the other. In my family, for instance, my mother often represented her gifts as coming from my father. She wasn’t being dishonest – this was exactly the way she saw – and he saw – the essence of being married. One flesh is one debt and one repayment.

Here’s Marx, noticing the way in which the social circle and barter are mutually determinative:

“Meanwhile the point we want to approach is the following: gold, in relation to the commodities in as much as it is supposed to be fixed as a coherent measure, is determined through barter, immediate acts of exchange; as the relationship of all other commodities to each other. In barter is, in the meantime, the exchange value of the product only in itself; it is the first phenomenal form of the same; but the is not yet posited as exchange value. Firstly this definition does not extend over the total production, but only its overflow [Uberfluss – surplus] and is thus more or less superfluous (as exchange itself); an accidental expansion of the circle of satisfactions, enjoyments (relations to new objects). It emerges then only in a few points (originally there, where the organic community stops being in contact with the foreign one), is limited to small circles and informs the ephemeralities, the supplements of production; extinguished as accidentally as it arises. The exchange act in which the superfluity of one’s own production is contingently exchanged against that of some stranger is only the first appearance of the product as exchange value in general and is determined through contingent needs, desires, etc. But if it becomes extended, as a continuing act, that contains in itself the means to its continual renewal, by and by there comes, just as externally and contingently, the regulation of mutual exchange through the regulation of mutual production, and the production costs, that are finally all resolved in labor time, will become the measure of exchange. This shows us how exchange becomes and the exchange value of commodities.”

Wednesday, February 10, 2010

Freedom and Money

As every amateur of economics knows (fellow cranks gather round!), money is a mystery that no classical or neo-classical theory has ever solved. Or rather, given the usual fictions of perfect markets with zero transaction costs, there would be no need for money. Thus, the hired, petty visionaries of the capitalist system have devised a model of that system that does not distinguish money from barter – a most embarrassing situation.

Whether Marx did any better is a much disputed question. Keynes, on the other hand, does seem to have grasped the nature of money more fully than others. In the General Theory, he wrote that “the second differentia of money is that it has an elasticity of substitution equal, or nearly equal, to zero; which means that as the exchange value of money rises, there is no tendency to substitute some other factor for it; - except, perhaps, to some trifling extent, where the money-commodity is also used in manufacture or the arts. This follows from the peculiarity of money that is utility is solely derived from its exchange value, to that the two rise and fall pari passu, with the result that as the exchange value of money rises there is no motive or tendency, as in the case of rent-factors, to substitute some other factor for it.”

What this brilliantly points to is that money is the socially materialized form of the principle of substitution itself, and in this way, the money system does compete against the barter system. The latter, of course, is far from a primitive form of the economy – it is, in fact, in millionfold daily use in the U.S.A. Whenever a man says to a woman, I went to see x film with you, now you have to watch x tv show with me; whenever a child says to another child, I gave you half of my M and Ms, now you have to let me play with your game; etc., the barter system is alive and well. It is an adhoc system of socialization, and it is certainly as important as money. The competition between the money system and the barter system also goes on a millionfold daily. At a certain point, one ‘feels’ the threat of the money system to our identifying social acts of barter, which is why such rule of thumb adages about not loaning money to relatives and the like float on our breaths.

But more to my present purpose – the advent of the money system as one in which the substitution principle enters as the unsubstitutable moment was felt to have something alchemical or uncanny about it. This is captured in Faust the second part. And it was also a significant dimension in the discourse about Freedom that became so important in the eighteenth and nineteenth century. On the negative side, there is no substitute – no alternative – to the principle of subsitution. On the positive side, this frees us from the bondage of the various, infinite and intimate forms of the barter system. Simmel, in the Philosophy of Money, makes a crucial distinction between “freedom from” and “freedom to”. He uses the example of a schoolboy who, graduating from the gymnasium, steps into the freedom of his college days – a freedom that is “quite empty and almost unbearable” – and so quickly throws himself into other activities, for instance student organizations, that enforce a whole new set of rules of behavior upon him – in contrast to a businessman, who works to receive freedom from a regulation because, once that regulation is dissolved, he can expand his business in a certain way – the “freedom to” is defined by expectations that will concretely materialize upon the moment of ‘liberation”, while the ‘freedom from” is defined by the lack of any clear expectation beyond the point of liberation.

“In brief, every act of liberation shows a specific proportion between the emphasis and extension of the overcome circumstance and that of the one gained.”

Introducing the principle of substitution as the universal rule of the economic sphere does create freedom from, but – as Simmel points out – it also creates a certain alienation. I’ll end this note with this bit from Simmel (who I hate to translate – his language is almost impossibly hooked together in German so as to make translation a drag):

Beginning with the peasant who wins his freedom by the extension of the money system: “Clearly, it was freedom that he gained; but only freedom from something, not freedom to something; evidently, a seeming freedom to all – because it was simply negative – but actually without any directive, with any determined and determining content and thus disposing to that emptiness and lack of restraint, which is produced by every extension without resistance of that accidental, delusive, and seductive impulse – corresponding to the fate of the unfettered person who has given up his gods and thus won “freedom” only to give space for making an idol out of every arbitrary momentary value. It isn’t any different with many businessmen, for whom, burdened with the care and labor of his business, makes it his cherished goal to sell it. When he finally, with the price in his hand, is really ‘free”, there ensues often enough that typical boredom, that sense of the pointlessness of life, that inner disquiet of the rentier, that drives him to the most wonderful, and to inner and outer sense most irrational business ventures, by which he only constructs a substantial content for his freedom. It is just like the bureaucrat, who wants only to reach a stage as quickly as possible where his pension will allow him a “free” life.”