(b) The Abolition of Money

Inflation, therefore, is not the proper way to abolish money. We have seen that capitalist economy is not to be removed at one stroke. So long as this object remains unrealized, it will not be possible to do without money.

Many Socialists regard Socialism as synonymous with “the end of money.” Thus Dr. Otto Neurath writes on page 14 of his book Wesen and Weg der Sozialisierung:

“We shall eventually have to emancipate ourselves from obsolete prejudices ... To retain the dispersed and uncontrollable monetary system and at the same time to aim at socializing is an inner contradiction. It is of the essence of money that it cannot be controlled, and all attempts to determine the proper quantity of money have been in vain. All previous efforts of financial policy have been practically ineffectual and theoretically unattainable, because money is an unsuitable object for all these endeavours. Once the nature of money has been fully recognized, the scales will fall from all our eyes, and the development of centuries will appear as a great mistake.”

The concluding lines of this extract are not quite clear. Does Dr. Neurath mean that he has at length discovered the essence of money, and that preceding generations have suffered and the history of centuries has been a mistake, because Dr. Neurath was not born before? In that case it would be his duty to sharp his discovery with us, so that the scales may fall from our eyes.

Meanwhile I am unable to cast off old prejudices if they are to include the Marxian theory of money.

According to Dr. Neurath, money follows its own course, which is quite anarchical and not to be influenced by anything.

I agree with Marx, who regarded this idea as mere appearance:

“Although the movement of the money is merely the expression of the circulation of commodities, yet the contrary appears to be the actual fact, and the circulation of commodities seems to be the result of the movement of the money.” (Capital, vol.i. p.90)

With the character of the circulation of commodities, that of the movement of the money also alters. There is no such thing as a movement of money, which operates as a socially independent and utterly uncontrollable force.

In place of the uncontrollable monetary system, Neurath would put “natural economy” What does this mean? At the beginnings of an economic system we find production is carried on for use. Each of the small communities of those times produced all that they needed and divided it among their members. There money would be quite superfluous.

Society progressed beyond this stage through the division of labour between various productive enterprises. Many of them now began to produce things which others did not produce but would be glad to have.

At this point the exchange of products between the undertakings commenced; these products thereby became commodities, and their production became commodity production.

At the outset commodities were exchanged directly. When such a transaction took place, it was quite a chance occurrence.

If a carpenter brought to market various tables, chairs, and chests which he had made, and a miller brought thence a sack of flour, it was not sufficient for the success of the transaction that the carpenter needed flour. The miller must also need a table, chair, or chest.

In the period of the direct exchange of commodities, no producer could rely upon effecting an exchange which he needed.

Each person had himself to produce all the necessary things of life. Only articles of luxury, or things for which one could await an opportunity to acquire them, came into the sphere of exchange. The division of labour between the producers was set within very narrow limits. Exchange transactions remained isolated and were an extremely clumsy process. Each person naturally tried to avoid working in vain for others. The measurement of the value of commodities according to the labour embodied in them was already beginning to take place.

But it did not systematically govern exchange; the conditions under which various commodities were exchanged for each other depended upon innumerable contingencies.

Great progress was made as soon as a commodity appeared which everybody was glad to take. Anybody who possessed this commodity could now acquire everything of equal value which came into the market.

If he possessed a supply of this commodity, he could always be sure of satisfying his needs so far as they could be satisfied by the products of other businesses which came to the market. On the other hand, everybody was ready to surrender his commodity for this, generally acceptable commodity, even when he had no immediate employment for the latter as an article of use. He knew that he would always be able to satisfy a need by its surrender.

Now exchange transactions became more numerous and the process of exchange was effected more rapidly and systematically. The direct exchange of commodity for commodity now gave place to the exchange of particular commodities for the general commodity which was gladly accepted by everybody.

As a result, division of labour among the businesses grew and production for the market tended to supplant production for use. The exchange of commodities, from being an accidental and occasional phenomenon, became a systematic process, the exchange value of each individual commodity tended to be embodied in a specific quantity of the commodity which facilitated exchange in general, and the determination of value by labour began to appear, not as a conscious act, but as an unconscious result.

The commodity which generally facilitates exchange is nothing else than money. Although what we have just expounded is familiar enough to students of Marx’s Capital, it must be developed once more in order to reveal the essence of natural economy.

Marx distinguishes between production for use and commodity production. From his standpoint, it is not very important whether the commodities are bartered or sold for money and purchased for money. The latter is merely a technical facilitation of the same process.

Orthodox economics makes a further distinction. It confuses the two essentially distinct economic stages of production for consumption by the producer himself and commodity production for barter under the name of natural economy. On the other hand, it distinguishes the two not essentially distinct stages of commodity production, that of barter and that of exchange through the medium of money. The first of these stages it assigns to natural economy, but the latter appears to it as a fundamentally distinct economic form, that of the monetary system.

In promising us a quite new perception of the nature of money which will cause the scales to fall from our eyes, Neurath shows himself to be far inferior to Marx in his knowledge of these matters.

Now what forms will the socialist economy assume? It will certainly not form a single factory, as Lenin once thought. In conformity with the requirements of the modern division of labour, it will fall into numerous undertakings, which in contrast to those of commodity production will no longer be the private property of individual producers, but the property of the whole of the consumers, whose needs they will exist to satisfy.

But the producers must be allowed the greatest possible freedom in every undertaking, which will be to a large extent autonomous.

At the same time, Socialism will not reverse the process of the separation of the household from industry, which is a product of industrial development.

Now this implies that a socialist society would not be able to exist without a system for the exchange of products. Their exchange would necessarily be of a two-fold kind : between enterprise and enterprise, for purposes of productive consumption, and between the undertaking and the household, for the purpose of personal consumption.

Even Neurath must admit this. Yet he imagines that it is a requirement of the socialist principle that this exchange should be made in kind, without the intervention of money. He has a superstitious fear of money, just as one used to have of intangible things. He fears that the intervention of money would ruin everything. He envisages the return to barter, as is usual among savages, as a long step towards Socialism. He announces triumphantly:

“Wherever we look we may perceive evidences of natural economic tendencies. Barter on a small scale is sufficiently familiar to everybody. But exchange in kind is also taking place on a large scale. During the war a number of Government authorities made the supply of sugar, etc., to the peasants dependent upon their delivery of foodstuffs. How far this undermining of the monetary system, how far this rationing system promotes natural economy will not be here discussed further.”

Nor need it be. What we have quoted suffices to show where we have to look for the source of the conceptions which Neurath and his like have of Socialism: from the emergency measures which sprang out of war-time necessities and disappeared with them, they generalize a whole system, which appears to them as Socialism.

It is a very peculiar idea to retain the institution of exchange, while abandoning the instrument which alone ensures the smooth and constant functioning of this exchange, without which division of labour and exchange upon the scale they have hitherto been carried out would not be possible.

Without money only two kinds of economy are possible

First of all the primitive economy already mentioned. Adapted to modern dimensions, this would mean that the whole of the productive activity in the State would form a single factory, under one central control, which would assign its tasks to each single business, collect all the products of the entire population, and assign to each business its means of production and to each consumer his means of consumption in kind.

The ideal of such a condition is the prison or the barracks.

This barbarous monotony lurks in fact behind the ideas of the “natural economy” of Socialism. We quote Neurath again:

“On the basis of the foregoing data, we should be able to compute how much bread, meat, accommodation, clothing, etc., could be allotted as a maximum to the individual. It would then have to be decided what provision should be made for meritorious work, heavy labour, children, the sick, and how specially important achievements should be rewarded, whether inventors, poets, engineers, artists, who had rendered great service to the community, should not be supported in institutions like the Pryntaneum of ancient Athens. The fixing of war rations has shown us that social measures of this kind are not excessively difficult.”

Assuredly not, if the entire life of a civilized man is to be reduced to war rations, and everybody to have the same quantity of bread, meat, accommodation, clothes, personal taste not playing any part and distinctions not being observed, although there is to be special cooking for poets and children. Unfortunately, we are not told how many hundredweights of books are to be allotted to each citizen in the course of a year, and how frequently the inhabitants of each house are to go to the cinematograph.

Besides this rigid allocation of an equal measure of the necessaries and enjoyments of life to each individual, another form of Socialism without money is conceivable, the Leninite interpretation of what Marx described as the second phase of communism: each to produce of his own accord as much as he can, the productivity of labour being so high and the quantity and variety of products so immense that everyone may be trusted to take what he needs. For this purpose money would not be needed.

We have not yet progressed so far as this. At present we are unable to divine whether we shall ever reach this state. But that Socialism with which we are alone concerned to-day, whose features we can discern with some precision from the indications that already exist, will unfortunately not have this enviable freedom and abundance at its disposal, and will therefore not be able to do without money.