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The Demon and its Conjuring Trick: Money

"The light in which the global financial markets operate is very dim.. Unveiling the money fetish is a task of economic literacy. The monetary sphere seems uncoupled from the real economy, the world of work.."

Capital is based on appropriation of the products of labor. Unveiling the money-fetish is still a central challenge of economic criticism.

By Elmar Altvater

[This article originally published in: Freitag 09, February 20, 2004 is translated from the German on the World Wide Web,  http://www.freitag.de/2004/09/04092102.php.]

Money is a puzzle that economic theory has still not solved today. Economic theory raises the wrong questions or forgets the questions. Early bourgeois theoreticians thought that society could be organized with a contract between all paying citizens with property rights. In contrast, the political economists of the 18th and early 19th centuries understood that socialization -division of labor mediated by the market - occurred long before members of society conceived of a contract.

Marx radicalized this idea. The division of labor from whose deepening Adam Smith and David Ricardo expected the constant increase of the prosperity of the nations needed money since only paying persons count in society. While the bourgeois economy represses the subject, showing money's genesis would make its mystery disappear.


Money does not only fulfill some functions awarded by economists: as a unit of measurement, a means of safekeeping, a means of payment and an object of desires. Money in the first place is the perfection of the commodity form. Products of labor produced by division of labor are exchanged on the market. The exchange of a commodity is ultimately perfected when it is changed into money... In money, sociality already exists in an objectified form that otherwise would have to be first reconstructed out of nothing in every act of exchange through a contract.

To that extent, money is the "true community". Gaining money makes one socially important. The need for money is the true need produced by economics. Therefore Max Weber was right when he described modern capitalism as an "acquisitive society". Money does more than socialize individuals. Money also develops a specific inverted consciousness that cannot understand the contradictions and development dynamic of society.


In his early writings from the 1840s, Marx spoke sarcastically about the distortions appearing in money and sometimes sounded indignant. The satisfaction of a selfish need through fraud and mutual plundering is made easier by money, he criticized. The person becomes ever poorer as a person and needs eve more money. Money is the pimp or panderer between the need and the object, between life and the means of life, the visible deity and the common whore. Excessiveness and extravagance are the true standards of economics. Economics develops as the science of wealth and the science of saving. Its ideals are the extortionate miser and the ascetic productive slave. "I have no call to study, no effective or true call when I have no money to study... I have an effective call when I have the will and the money." That sounds very modern.

All the contradictions of the capitalist market society are expressed in money in an obscure way because the connection between production and exchange, between production of wealth through labor and appropriation by means of money and capital is invisible in money. Money appears as the key to mastering all problems. Whoever has money is good. Conversely, whoever has no money is a poor wretch. For that reasons, compulsory savings for those with nothing is extolled today as a virtue just as the big splurge of the rich is praised as an economic boom. Economizing is expected today above all from the public institutions - to the burden of social state transfer incomes - and from the big splurge of private persons vested with purchasing power through tax cuts that contribute to the impoverishment of public institutions. Chancellor Schroeder moves in a foolproof hypocritical way in this contradiction. On one side, savings through spending cuts is praised as a reform. On the other side, Schroeder urges his "fellow citizens" to consume more from their reduced incomes because "the job of your neighbor depends on your demand... "

A fetishism of money allows the social contradictions and development tendencies to appear in a transfiguring twilight obscuring their contours. The light in which the global financial markets operate is very dim. Fishing in troubled murky waters is good though enlightenment is necessary. Unveiling the money fetish is a task of economic literacy. The monetary sphere seems uncoupled from the real economy, the world of labor. That is the reason for the contempt with which rich people and their water carriers, the so-called "analysts", look down on those who earn their money through manual- and brainwork and not by letting money "work" for itself. Fetishism prevents them from suspecting that the "working money" is often the brutal-ruthless appropriation of the products of labor, the exploitation of others.

Only sometimes and for a very short period are people conscious that money without labor and produced assets is worth nothing. Money is a claim to real produced income streams from which a part must be set aside according to the amount of the financial assets and the interests to be paid. This can also lead to profit rates (returns on investments) being inadequate for paying the interests. Then investments are cancelled. Employment falls and the number of unemployed or precariously employed in the "informal" sector rises. Thus wage costs are lowered so the profit rate climbs.


The fetishism of money always has ready a conjuring trick that removes the distinction between the real economy and monetary spheres of the economy. Business profit is calculated as "shareholder value" and thus directly comparable with the yield of every investment on the globalized financial markets. Wages and salaries are understood as returns of financial investments in "human capital" so that all the distinctions between the different kinds of income disappear and are reduced to capital returns of different amounts. The money fetish like the demon of Laplace creates order through simplification and reduces complexity where this has increased through the works of money and capital. As a result, life with the money fetish is simpler than its critical deconstruction.

The financial crises show that this simplicity is obviously a deception. Marx wrote mainly about the cyclically recurring economic crises. One important aspect of the accumulation crisis was always the money- and credit-crisis though this was not as central as the aspect of real over-accumulation. This has changed in globalized capitalism. The global crisis of the past two decades obviously have their origin in the real economy. However their spread and dynamic are consequences of financial globalization. Financial innovations contribute to making flexible and mobilizing local capital. Trade on globalized financial markets causes an adjustment of financial conditions without helping the real conditions (for example "business culture" or labor productivity). As the crises of the past decade in Asia, Russia, Latin America and Eastern Europe have shown, worsening conditions spread or take their toll on society altogether. Poverty and unemployment are increasing. The social expenditures of the state are reduced to satisfy the claims of creditors of financial loans. The real economy becomes the hostage of the globalized financial markets.

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