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The Evolution of Exchange.

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The Evolution of Exchange. The Economic Factors at Work How Money Came to Function [The publication of the first part of Mr. E. J. Williams'' "key-lecture" to Economics on the 44Evoltitiori of Exchange," which appeared in our last week's issue, has brought us several appreciative thanks. Here is the concluding and more important moiety. We trust that all economic students will make the fullest use of this value-able outline of economic deter- minism, since it is a branch of the subject touching which there is not at present on the English market a reliable cheap guide.] MONEY'S TWO PRINCIPAL FUNCTIONS. Two main reasons explain the rise of money exchange; first., there was the need for some means of comparing the values of different com- modities; and, secondly, the need for a medium of exchange. Let us deal with the first—the need for a common measure of value. Under barter each article sees itself in its bodily form of use-value; and this is true of every other com- modity which have their own different value forms. Every article thus expresses its own value, but every article expresses that value in a different way.. There is no common form of value, and therefore, no means of comparing all values simultaneously. Comparison is only pos- sible when all the articles compared are con- sidered in terms of the same thing. It is the ne- cessity for this comparison that results in the development of some value form that will be common to all value forms when they are ex- pressing their values. This is easily seen in a simple example. Suppose we have three rooms the temperature of which we desire to measure; room A we measure with a Centngrade ther- mometer room B with a Fahrenheit; and room C with a Reaumur. NVe shall be able to arrive at the temperature of each room in the terms of the particular thermometer employ'ed; but if we wish to compare the temperature of the three rooms we shall find it impossible to do so until we either take a new reading of the three rooms on one particular thermometer or translate the readings of two of the three- readings to the unitary system of the other. Exactly the same is true of commodity values. They also can be measured according to different standards of use-values, but if they are to be compared as well they must be all compared with the same standard. This is the practical reason that leads to the adoption of a standard through which all oommodities may express themselves in one and the same use-values. THE THEORETIC SIDE. But, in addition, there is also a theoretical view of the question. Commodities, as we have seen, are twofold things, possessing both use- value and exchange-value, due to the twofold character of the labour which produces them, which at one and the same time is both useful, or concrete labour, and abstract socially-neces- sary labour. As measured by use-values articles are incommensurable. The products of concrete labour are incommensurable because there is no standard by means of which they may be com- pared, since concrete labour is heterogeneous, but as products of abstract, socially necessary labour, articles are commensurate, because ab- stract labour is homogeneous, or unitary, that is, it may be brought down to an unit point- of unskilled labour. If values are to be expressed and compared they must all be reduced to one common denominator, but. different labour turns out different products; the miner produces metals or coal as the case may be; the weaver cotton cloth or woolen goods, therefore, one bodily form or use-value must be taken to repre- sent the whole, and this is possible because the one taken as the form of value by which others are comparable has the common character of possessing abstract human labour. By this means a general form of value arises. This may be ex- pressed in terms of any commodity, but gold is the general form by which all commodities in the world may be expressed in a bodily form. HOW IT WAS EXCLUDED. Practically, this exclusion of one commodity from all the rest was effected in this wav. In early exchange-relations one commodity is in greater request than any other (say skins) hence it is exchanged for more both in quantity and variety of other products than any other one, consequently it acts as a measure of value of more commodities than any other. This article which was most in demand becomes the measure of value, and by this means it gradually becomes excluded as the general measure of value, and, in time, this particular commodity becomes the recognised universal measure of value, or money. The resultl is that now the values of all commo-i dities can now be measured in terms of the same unit. This is money as the measure of value. MEDIUM OF EXCHANGE. Let us now see how, under the expanding nfeans of production in private property rela- tions, stimulated by the growth of exchange, the need arises for money to. aet as a medium for circulation, and why one commodity is specialised to perform that function. The essential condi- tion upon which barter rests is destroyed if the parties do not want each other's goods for use. Suppose that A possesses surplus arrow heads which are desired by B, who offers skins in ex- change. If A does not desire skins as a use- value then there would be a deadlock; but A does take the skins because he knows that they are universally in demand as clothing and bed- covering. The skins thus become valuable to A not as use-values, but as exchange-values. This would happen not only in the case of A. but in the case of all others from time to time and all would be prepared to accept as a medium of ex- change some commodity universally desired as a use-value, and which could therefore serve- universally as a medium of c-xcliaiige P In this way one commodity would become, by custom and practice, looked upon as a medium of ex- change as well as a measure of value, and would be set apart by the common action of all parties as money. All this would develop unconsciously, but later on the excluded commodity would be- come universally desired because it 'had become money—the measure of value, and the medium of circulation. Bii. RIDGING THE CONTRADICTION. Thus the primitive function of universal de- sirability as a use-value is reversed, and the commodity becomes universally desired as a me- dium of exchange. As a use-value an article can only satisfy one want, is only individually alien- able but as exchange-valule a commodity must oe universally alienable. But in itself the use- value nature of a commodity excludes the ex- change-value nature and not until these things are separate can the difficulty be overcome. This can only be done by money and the separation of the two values. If use-value is exchanged for money its value receives a form separate and distinct from its use-value. The.commodity func- tioning as money represents only exchange- value, and as such is universally desired. It re- presents value because it is the form of value for all other commodities, as well as directly ex- changeable for them. SOCIAL WORK. A third reason why money becomes necessary, is the need which arises at a certain stage in individual production—and consequently of ex- change—for some means by which private and independent labour may be proven to be social. Primitive Communism had no individual produc- tion because technique was so crude that social co-operation had to be resorted to to compensate the labourer for the lack of tools. Capitalist production, on the other hand, is anarchical, or individual in character. Labour in commodity production is individual and not directly social. How then is individual labour to be proven to be social? Only by being exchanged for some- thing which is recognised as the social equiva- lent. The capitalist is compelled to market his product, and by exchanging it for the universal equivalent, gold, prove that his labour expendi- ture was socially-necessary labour. There are the theoretic and practical reasons which neces- sitated the separation of commodities into com- modities and money; and this exclusion of one commodity from all +1,1" rest to serve aq mcney was quite unconscious in its development. Men solved the problems presented to society as in- dividuals and not as a social body. It was be- cause they followed the same general needs that they all acted in the same general way. As an individual in society man consciously acts to satisfy his individual wants, what he does not do is to realise the consequences of his individual actions in social results.

"lhe Minstrelsey of Peace.".

I Pontypridd Notes.

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