Exchange Value & Money

Exchange value builds up on use value, except that these products or commodities are now being exchanged for one another, and usually made for this purpose. This often arises out of surplus, such as a farmer who has produced far more grain than they can use and then go to a local market to exchange it for something. So you might have someone exchange 10kg of grain for say, 2 hammers. Therefore, 10kg of grain=2 hammers. This is how a barter economy works. However, the person with the grain might not always want hammers and the person with the hammers might not always want grain. So the person with the grain goes to someone for some eggs and lets say they can get 25 eggs for their 10kg of grain. So now 10kg of grain=25 eggs=2 hammers.

Now lets say the person with the grain does not need more hammers or eggs, but instead wants a decent horse. The person with the horse says the person with the grain needs to pay him a total of 50kg of grain for it. So now we have 1 horse=50kg of grain=125 eggs=10 hammers. A form of credit can also come about here if the man with the horse allows the farmer to pay in installments and usury can develop if there is interest placed on it. The horse trader might also only need 15kg of the grain he acquires from the farmer, so the surplus grain (ie; profit) is either stockpiled to further build their wealth or is exchanged for other goods, such as the aforementioned hammers.  You can see how this can go on and on as there are more different types of goods and quantities of them that become available for the purpose of exchange. It can get very complex, confusing and cumbersome as time goes on.

Enter money. Money, according to Marx is simply a commodity that becomes a universal equivalent that develops as a result of the complexity of barter and the need to simplify the process of exchange, especially at a town market. The commodity that becomes a universal equivalent can be anything, but usually it is things like gold and silver, as the socially necessary labour time to obtain gold and silver is often substantial, it is rare and people value it for various reasons, such as aesthetics or for their conductivity, as is the case with modern electronics. In traditional pastoral societies, cattle also might be a kind of ‘money’.

If you’ve ever seen a film that takes place in a prison, prisoners in these films usually use cigarettes as a universal unit of exchange. If you play video games, the bottle caps in the Fallout series are the ‘universal exchange’ and the reasoning for this is similar to why gold and silver becomes valuable in the real world. In games Metro 2033, pre war ammunition has a high use value due to them being superior to post war ammunition and the fact that bullets of that quality are not produced any more, and the fact that they get actively used makes them rarer. The problem for this type of money is that over time, it would be excessively deflationary as the society develops and changes and so would at some point have to be substituted for something more stable. The difference between something like say, pre war ammunition in the Metro series and bottle caps in the fallout series is that the bottle caps are much more like fiat currency in the real world, whereas the ammunition is more like gold, as it has a use value beyond solely being a commodity used as a medium of exchange. Money can also become a ‘commodity fetish’ in the sense that people might assign metaphysical, idealist or moral qualities to money. An example of this might be the formation of the idea that someone having more money than others means that person necessarily has to be smarter, more virtuous and an overall higher quality of person than others due to them having hoards of money.