 Akun iddangos hysri, amddai'n amser yn gwneud hynny yn gyffrithiedig yn y society. Yn y gallu'n ymddangos i'r worn yn fy ymddangos, sy'n mynd ymddangos eich bwysig yn y rhwng ofiau. Mae'r ddechrau, mae'r dda wedi'u mynd yn ymddangos hwn o rhan fach. Mae'r drefawr mewn bywysig yn mynd i'ch ddechrau, a'r hyffewr mwybio gan gyfryd yn ymddangos. Mae'n cyfrifio ar ymddangos, ac mae'n cwer o hyfysgol yn ymddangos i'ch ddaoli, Because all of our needs in society are ultimately relegated to the need for money within capitalist society. And the thing is like all these kind of revered idols in society, whether it's the gods or religion, or today the idea of the law and the state. yw cwm sequences y gallwn gwirionedddydd y busurion yw'r methu, y gallwn gwirionedddsynau a'r gyda'r gwirionedddsynau. Yn gyflwyno beth sy'n hyn i'w bwysig o'r eigwyddiadoedd nesaf, rydyn ni'n sgwrsau'n rhan o'r cynnwys, a chi'n meddwl hwn yw mynd i'r rhyfedd mwythu behysu, y ddon nhw fydun oherwydd i fod ysgronwyd o'r problem. wouldn't I see the Europe society, which isn't money itself? By performing that we can also understand how to get rid of the symptoms of evil that seem to come from money. If we study history, we see that money didn't always exist. The idea of money is tied in, with the idea, classes of society in particular, with the idea of commodity production and exchange. of humanity. Society wasn't actually split into classes at all. You didn't have exploiters and exploited, but rather you had tribes which were based around communal ownership of the wealth in society and of the tools and the means of production by which this wealth was created. And Marxist referred to this as primitive communism, and if you want to know more about this I recommend tomorrow's session on the origins of class society. But just to briefly go over it, the idea of primitive communism was you didn't have exchange between individuals, but rather you had this common ownership, a kind of communism if you like, where production was for the common good and consumption was on the basis of need from the common pot. But we call it primitive because unlike the communist society that Marxist fight for today, it was primitive in the sense of it was on a very low level of economic development. It was communal out of necessity actually because there was scarcity and it was necessary for people to group together. There wasn't the resources and the development of science and technology to be able to have this kind of private ownership and class society and the idea of a minority of people who could live off the wealth and the labour of others. But within these primitive societies at the fringes there was exchange with other tribes and through that exchange you began to get the development of commodity production where now instead people were starting to trade and rather than produce for their own needs or for the needs of their own tribe they were producing in order to sell and this would originally be the surplus in society that was sold to other tribes in exchange for the things that they needed and so you get the development of trade and with it the development of commodity production in exchange. But once it's developed on the fringes it starts to spread internally inside the community as well. You start to get division of labour, you start to get private ownership and more and more within the community you get people producing not for their own needs but for a market, for the consumption of others, for exchange and that's what we refer to as commodities, the idea of goods and services produced not for individual consumption or for society as a whole's needs but for the market or for selling to exchange with others. Now originally this commodity production exchange takes the form of barter basically the idea that people would exchange their commodity with someone who had a commodity that they needed. Now this primitive form of commodity production exchange is very restrictive actually on trade itself. Basically you've got to go and find someone who not only wants what you are selling but also is selling what you want and obviously the chance of this happening is very restrictive. It means also as a producer you're having to carry around your actual commodities with you if you want to find people elsewhere who are selling what you need and so the market if you like, the idea of people coming together to exchange is very restricted and trade itself is restricted. So what happens in history not by design but by the necessity if you like of expanding the market of facilitating trade is that one commodity, a single commodity emerges as what we call a universal equivalent, something that all other commodities can be exchanged for, that all other commodities can be held against and can be compared to. Basically this then separates the act of exchange into two poles, a purchase on the one hand where commodity is exchanged for this universal equivalent which is in effect the origin of money and then that money can be exchanged in a sale, sorry the sale occurs first with the commodity exchange for money and then you have a purchase money used to buy another commodity and so this commodity to commodity transaction is transformed into what we call the CMC circuit, commodity, money, commodity and this universal equivalent as I say is really the origin of money, acts as a means of exchange, as a means of allowing this circulation to occur. But as I said it doesn't occur in this whole process we're talking about a very long drawn out evolve process that doesn't occur due to any design or plan but occurs due to the needs of society, the needs for trade to expand and in that sense the actual initial commodity that emerges as this universal equivalent is fairly arbitrary and accidental although it obviously has some sort of material basis in tribes where cattle is very important then cattle becomes the universal equivalent where in places where rice is growing in large quantities and is the main source of food bags of rice become the universal equivalent. You see in studying different societies lots of different universal equivalents that have emerged in these early stages but it's unconscious and it's unplanned. Now obviously you can imagine being a trader and probably finding it quite inconvenient to have to carry your cattle around with you in order to then exchange something else or giant bags of rice. Obviously it's not a particularly convenient state of affairs for people to go around trading carrying such cumbersome commodities with them and in that sense this is why really historically the idea of precious metals as the universal equivalent seems to take hold. It's not for any sort of aesthetic reasons. Today obviously we revere the idea of gold and silver as these very precious metals. We consider them precious because they've got this long history of being used as money but the reason they used as money was not because of their aesthetic qualities but rather because of much more material qualities that they had. For example very durable means they're not going to, unlike your cattle or your bags of rice, they're not going to deteriorate. In that sense they're going to store value over time. They're not going to lose their value from one moment to the next. They're very homogenous in the sense that gold is gold is gold. All gold tends to look pretty much exactly the same but they're also easily divisible. You can divide metals up and in that sense one metal when divided up or recombined can represent lots of different quantities of value. But most importantly these metals are very valuable in and of themselves. They require a lot of effort in order to produce and in that sense within this tiny lump of metal is contained a large source of value. So as I say gold is money not because it's aesthetic qualities but rather we deem to have these aesthetic qualities because it is money. Shows that even in the early days of money there is a materialist reason for why the precious metals emerge as that universal equivalent. But I've talked about the idea of value quite a lot but not actually explained what is value. How is it determined when we talk about some commodity being valuable? What do we actually mean? To understand this we have to go back and look at the idea of a commodity again. As I said a commodity is goods and services produced not for individual use but for exchange. In this sense Marx says commodities have a dual nature to them. On the one hand they have a use value. There's something useful about them. There's a utility generally in society these things fulfil some sort of need. On the other hand they also have an exchange value which is different from this. How much of one thing is going to be exchanged for another? What's the quantitative relationship between two different commodities? Actually there's a divorce between these two dual properties within a commodity because the things that are useful in society or which we might consider most useful are not necessarily the things that are also most valuable in terms of their exchange value. A pen is very useful and a car is very useful but nevertheless a car is considerably more expensive than your average pen. Meanwhile diamonds actually have very little use value in terms of day-to-day society other than their aesthetic qualities but they are nevertheless extremely valuable. Marx in capital and his other writings explains the origin of value. He says it's ultimately the value of a commodity is related to the amount of human labour that has been embodied within it. In other words the amount of human effort that goes into producing that commodity. In short I guess you can kind of say that time is money in this respect the old phrase that we often hear. But the idea of this labour being the source of value was not a new idea but actually had come from previous classical economists' performance people like Adam Smith and David Ricardo and in fact had even gone back all the way to the classical ages where they had a very basic understanding of the idea of labour being the source of value. Not just the living labour, i.e. the labour that you put into that commodity yourself but also all the raw materials and the tools that have gone in producing that commodity. All of that is dead labour if you like, crystallised labour from the past that is transferred through to the current commodity. But Marx's jury distinction from the previous economist pointing out that it was not just the individual's labour time that was what was causing value but it was socially necessary labour time. In other words if I take twice as long as my neighbour to produce a chair I can't go to the market and charge twice the amount for it but at the end of the day it's the latest level in society, the historical and cultural level of technology and science and technique that determines the socially necessary labour time. If you're less efficient you can't sell your products for more amount. Because in other words what you see really on the market is not people exchanging one commodity for another and comparing the labour times with each other in order to determine the price. No, all you see on the market is an objective price that emerges from all the exchanges, from all the interactions in society and through this constant back and forth of exchange the price is determined. You're confronted in a shop with an objective price. You can't go into most shops in Britain and haggle over the price. It confronts you as an objective fact but nevertheless one that has emerged from all the exchanges in society. It's a dialectical property if you like, emerging from all the interactions, all the back and forth, all the buying and selling over time the flow of information through prices determines what you see on the market. So price really is the product of money. When we talk about value we're talking about the socially necessary labour time in the commodity but the price is what you see on the market. It's the monetary relation of value. It's the monetary relation between different commodities and in that sense it's really a social relation as well because it's relating the different quantities of labour of different people. But price and value are not the same. Price is something that fluctuates on the market. It fluctuates with market forces, with supply and demand but it always fluctuates around some sort of equilibrium. Mark's pointed out that actually the market doesn't determine everything because at some point supply and demand must be equal to each other. They must be an equilibrium and what determines then the actual quantitative relationship of one commodity with another. All that prices really do is provide this information. They provide a signal to investment fundamentally. If you've got supply far in excess of demand then that's going to push prices down below their actual cost of production, below their real value and it's going to mean that people are starting to make a loss producing and a certain amount of supply will come off the market. Vice versa, if demand is in excess of supply then you're going to see basically people being able to make super profits and capitalists pouring investment in to take advantage of this and trying to bring back this equilibrium. So the role of prices is to act as this signal. It's the invisible hand that Adam Smith talked about that determines the flow of investment and of capital through the market. Now on a day-to-day basis obviously the vast majority of us don't use money for investment but use it merely for our consumption. We use it to purchase other commodities. We're involved in this CMC circuit they talked about buying or selling one commodity in order to buy another. But with that circuit emerges also its inverse, the idea of starting with money buying up commodities in order to then sell them for money and in fact not just for the same amount of money no one ever buys in order to sell and reach back where they started but rather with merchants what you see is the idea of trying to buy cheap in order to sell dear and make some sort of profit in the process and alongside that as well you actually get people who try and skip out the whole middle stage altogether and just try and make money at money. The idea of money lenders, users, all of this emerges at the same time or in the same process through the historical development of money. But the thing is with such people is they don't really play any socially necessary role in society. On the one hand they play a necessary role in facilitating trade and banking and finance and so forth which is necessary for industry and for commerce. But at the same time they're parasitic, they're not actually generating any new value in society, they're just transferring and moving it around. In fact the profits of merchants and users and financiers is not a real profit if you like, it's not a profit that's increasing wealth on a societal level but merely it's cheating really, it's transferring the wealth that's been produced somewhere else in real production and this is what the classical economists before Marx couldn't really get their head around is where did actual profits in society come from because if you just cheat your next door neighbour that doesn't generate any new value in society, if everyone just cheats everyone else in the process of buying and selling then the result is just inflating prices overall. If everyone charges the person before them 10% more then eventually it's going to come back round to bite you in the behind and you'll end up seeing your costs increase by 10% as well, it just leads to a general inflation in society. The idea is really that value isn't produced through the act of exchange and circulation but rather exchange and circulation only distribute the value and redistribute the value that's been created in production and so Marx understood and Marx made the quality of the leap forward by explaining that new value had to come about from labour time, from the application of labour and that profits had to be found somewhere in this process, in production, not in exchange and circulation and he discovered that there was really one commodity that was very unique in that it could actually produce more value than it itself costs and this commodity he called labour power, the ability of a worker to work and it's this commodity that workers in fact sell. This is the only thing in fact, the only real commodity that the working class has is its ability to work for someone else, its ability to provide labour and this is what is obviously sold to the capitalist, the ability to work is what is sold by the worker to the capitalist in exchange for wages and wages are the money form or the money equivalent if you like of labour power and such wages are determined in the same way Marx said as any other commodity in terms of the amount of socially necessary labour time needed to produce and reproduce the working class, in that sense it's the food, the shelter, the clothing, the education, the training, the healthcare, all of these things that go into basically keeping the working class alive and going from one generation to the next. This is what wages and the capitalist pays wages in exchange for the workers labour power, the ability to work for a certain period of time whether it's a day, a week or a year and it's then up to the capitalist to basically extract as much actual labour from the worker within that time. For example, if the working day is eight hours then it might take for example only four hours for a worker to reproduce the value of their wages. In the space of half of that day they're producing the equivalent of whatever it is they're making that would go into their wages in terms of the food and shelter and clothing and so forth. The rest of that day, the other half of the day, the other four hours then from the point of view of the capitalist is unpaid labour, they're not having to pay for it and whatever they get from that worker in that time is effectively free as far as they're concerned. And Marx points out that's the real source of what he called surplus value. It's this extra free labour if you like, the unpaid labour of the working class ultimately that is where surplus value comes from and that surplus value is in turn where profits derive from. Now this is different from other forms of class society. In slavery for example it's the actual slave themselves who is the commodity, slave basically derived from the idea of a tool with a voice is what it fundamentally comes back down to. In feudalism where you had serfs and lords then basically the serfs labour was directly appropriated by the kings and queens and the feudal lords and in fact in both of these earlier forms of class society the vast majority of actual labour is being done not for the market at all, not for commodity production exchange. But capitalism is that first form of society where the vast majority of the economy is now commodity production exchange where the vast majority of production is being done for a market, for sale. And it's the pursuit of profit within capitalist society that actually drives society forward. It's the needs of the capitalist to constantly try and reduce their own costs by investing that surplus back into new technology, into new science, into new technique, into new means of production. They're constantly competing with each other to reduce their costs and in doing so capture more the market, make bigger profits, sell cheaper than their neighbours. And this is what drives capitalism forward. This is what Marx referred to in the Communist Manifesto as creating wonders faster passing Egyptian pyramids and Roman aqueducts. Ultimately it's this production for profit that really defines capitalism along with the idea of the wage labour and capital relation. In previous forms of society you didn't have a class of people who had nothing to sell but their labour. In feudal society people could work on the land, they had the land, they owned the land. Now with capitalism you have people ripped from the land and forced into the cities to have to sell themselves to the capitalist in exchange for wages. And it's that relationship, that capital wage labour relationship that defines capitalism. Capital is, Marx said, value that seeks to create more value. It's capital that goes out to try and make profit. And in that sense not all money is capital. Just because we have money doesn't mean we have capital. It's a question of quantity and quality. Most of us don't have enough money to be able to invest at all. In fact most of us will probably be in debt for large amounts of our wealth. Obviously it's only a certain class of people who have enough wealth that they can live purely off the income stream that that investment of that money creates. Now the surplus value created in this process is then divided up into profits on the one hand but also into rent and interest. This surplus value, a certain proportion goes off to the bankers and the financiers. That's where the user is and so forth get their money from. It's a slice of the surplus value created in the productive process. And as I said at a certain point within the history of the development of money and trade there comes the development of banking and finance itself, the user and the moneylenders, who basically deal with money as a commodity which it is. It is a commodity with a supply and a demand just like any other commodity. And actually banking goes all the way back to about the third millennia BC where in Mesopotamia for example people would entrust the temples with their money. Basically rather than wandering around with all their gold on them which was liable to be stolen they would deposit it at the temples and in exchange get notes that basically were the equivalent of money. Basically saying you could exchange these notes with other people and it would guarantee that they could then exchange those notes at a temple somewhere else or a bank somewhere else and get the gold instead of transferring all of this precious metal around. And in that sense as I say the banks are tied into the idea of money as a store of value. The fact that it's able to be hoarded and actually removed from the circulation process. In the middle ages you even start having the development of basically monasteries that start giving out loans and actually lending this money back out again. In fact that's where the term mortgage comes from. Amor gaj. It was basically a death pledge that would only die upon redemption. Now it's with international trade however that there's a qualitative change in this whole process and you start to get professional bankers separate from these temples and monasteries and so forth where basically there's a need for all these different coins that are coming from different parts of the world to be able to be exchanged and to be lent back out in the form of credit. And in that sense the development of capitalism and international trade in particular is linked to the development of credit as well. The two are completely intertwined. The development of banks that are actually loaned back out money. The idea of banking notes and checks that can be accepted in place of hard currency and are in fact backed up by the precious metals in the banks. And this is what money also takes on the role of a means of payment in other words it's a way of paying off your debts a promise to basically pay someone in the future to pay the bearer of the money in the future and that's why in fact if you take out a 10 pound or 20 pound note today you should see somewhere on it written I promise to pay the bearer of this whatever it is the equivalent of 10 pounds in gold. It's a historical anachronism relating back to these times. Now what is the role of credit under capitalism? Well Marx explores this as well and points out that credit in the capitalism has a dual role. On the one hand it's basically expanding the economy through allowing increased investment. On the other hand it's also helping motion within the economy helping circulation itself. It overcomes blockages in the economy and allows for a kind of fluidity and an increased velocity. Basically capital is dynamic. It has to be in motion as soon as capital stops being in motion as soon as there's a blockage somewhere in circulation then you see commodities starting to stock pile up and that can't be sold and if commodities can't be sold then people stop producing and if people stop producing then people will come unemployed and you get these slumps emerging. So capital needs to keep going and credit allows that process to happen because basically rather than this stop start of motion where a capitalist would have to sell all their goods in order to buy their raw materials in to make the next round of goods rather allows them to borrow money and keep circulating, keep production going, keep them selling at the same time that they're buying. At the same time it allows capitalists to invest and rather than have to accumulate vast quantities of money in order to then put an outlay of investment in to expand their productive forces it allows them to basically borrow from the banks and with the promise that they're going to expand their production and pay that loan back. So it's at the same time it's allowing this motion it's allowing this expansion of capital itself. It's allowing the expansion of the productive forces themselves. Now alongside this role of credit we also see it basically being used to artificially expand the market itself. The savings of some particularly the rich and the big capitalists are lent out to ordinary people to households to the working class so that they can smooth over their consumption for example the idea of a mortgage which is obviously a very large purchase that most people couldn't make in one go but through credit is something that is accessible although increasingly less accessible to normal households. Now in this sense as I say it's used to temporarily increase the demand in the short term and in fact artificially expanding the market for commodities that's what loans and credit cards ultimately do. Allow us to buy today the things that we cannot afford. And really in this sense we see credit's role as basically trying to overcome the key contradiction within capitalism itself. The contradiction of overproduction. The fact that there's this constant tendency within capitalism for the productive forces to come into conflict with the limits of the market. Capitalism wants to expand the productive forces constantly to try and make bigger profits to accumulate greater wealth. That's the role of capital as I said to generate new value. But on the other hand you've got this limited market. Why? Because at the end of the day capitalism is the system of profit where the workers are only paid back a fraction of the wealth that they're actually producing. And that very fact means that the wages which are the market and all capitalism's goods are always less than the value of the commodities that capitalism is producing. This is what we call the crisis of overproduction. And in fact it's an inevitable product of capitalism because of the fact that profit is the unpaid labour of the working class. And credit is really a temporary way of, and I should emphasise that I really only have a temporary way of overcoming this contradiction by on the one hand allowing the capitalist to drive down wages and increase their profits. But on the other hand lending back to the ordinary people the ability to lending the money so they can actually carry on buying the commodities that capitalism produces. Because if they didn't then as I said capital would stop. It would stop being in circulation it would stop being in motion and that's where you get slumps in the economy. But as I said it's only a temporary thing and in the long run all this does is really expand the productive forces and pave the way for these credit bubbles to burst and for even bigger crises to come about which is precisely obviously what we're seeing today in the current crisis which is a product of decades of massive expansion, unprecedented expansion of credit ever since the 1980s with the big bang of deregulation in Britain and elsewhere where basically credit was used, loans, mortgages, credit cards to basically overcome this contradiction of overproduction to it meant on the one hand governments could attack wages and increase profits of the capitalist but on the other hand they could keep production going, keep the market expanding and obviously all of this came to a halt in 2008 with the so-called credit crunch. But Marx actually pointed out that it's not the lack of credit that causes the crisis but rather the crisis that causes the lack of credit wasn't, the 2008 crisis was not simply a credit crunch in that the lack of credit caused the crisis. Rather what you had is a system whereby suddenly people stopped lending to each other, the credit stopped flowing because people could see that there was too many bad debts on the books and it's worth exploring exactly how this process arises and to understand it we have to see how banking even works in its first place. The fact is actually the vast majority of money in circulation which isn't even in notes these days but obviously just numbers on a screen but the vast majority of money in circulation is actually created by the banks themselves, it's not the cash that we see or the money that's printed at the Royal Mint but it's actually created by banks that wants the demand for loans. So basically a bank will keep a certain reserve of its deposits, ordinary people deposit money at the bank and it will then loan out a vast proportion of that, vastly more than the amounts it has in reserve. Actually it will loan these out to people in both capitalists obviously who want to make new investments but also households who want to have mortgages and increase consumption and so forth and so only a fraction of deposits is kept, the rest is lent out and basically this is lent out backed up by this small percentage left back in the bank and all that money lent out, all that debt basically is the creation of money by the banks themselves. Now if people start demanding their money back and obviously the bank needs to be able to cover that and so they borrow from each other but when the various banks realise that there's many debts that aren't going to be repaid then obviously they stop lending and that brings about this whole scepticism in the financial industry and causes the contraction of credit and the contraction of production as a result and basically that's one then also causes runs on the bank, people worried that actually the bank doesn't have the money there in the vaults to be able to pay them and in fact basically a bank run once it starts is a self-fulfilling prophecy because obviously the bank doesn't have all the money in the vaults that it's lent out and obviously that's what we saw as recently as 2007 with the run on Northern Rock. Banks make their profits as I said from this of the surplus value produced elsewhere in real production but we see it in the form of interest, they obviously loan out money to people and charge them a certain interest rate but then borrow from others and charge a less interest rate and it's that difference that causes the banks to make a profit but in general interest rates reflect the demand for money in society a high interest rate then basically people are encouraged to save, they'll deposit money in the bank and it becomes more profitable to invest rather than it becomes more profitable to deposit money in the bank than it does to invest it and vice versa low interest rates are used to try and encourage people to invest rather than to save. Now as capitalism develops this whole banking system begins to actually merge with industry itself, we see a merger of industry and finance and in fact the biggest firms start to gain access to the very own kind of financial arms, they develop their own financial arms, we see today basically big business will loan out directly to their consumers in order for them to buy back, the fact that you can buy televisions or cars for example on money lent by those very same firms but we also see the development of joint stock companies in other words capitalists that rather than going to the banks to gain money for investment actually start to issue shares and basically the idea of issuing a share is that you're entitling someone in the future sorry you're entitling other people to a share of future profits and selling them this piece of paper entitles them to that in exchange they give you money and that money is used for capitalists to invest and hopefully generate bigger profits in the future and so with the development of capitalism is this enormous development of the financial industry, this enormous speculation actually because ultimately these shares become more and more divorced from the actual value that they represent, all these loans and debts and these shares become financial commodities that are traded in exchange in and of themselves in an attempt to make money out of money but as I say the prices become actually divorced from the real value that they represent whilst the company might have a certain value tied up with all the machinery and the capital that it has ultimately the price of these shares becomes vastly inflated in comparison to that and these pieces of paper become completely divorced from what they initially were supposed to represent and the result is these enormous prices price bubbles and stock market bubbles and Mark's called this fictitious capital, the idea that it was all these commodities being traded, all this capital being traded that actually had no real equivalent of value in circulation and alongside this same process is the divorce of the capitalists themselves from the productive process whereas we might perceive of a capitalist as being someone who wears a kind of Mr Money bag style tuxedo and has his big eight gallon hat or whatever it's called owning or of the mill or of the factory, today obviously really capitalists aren't business owners at all, they don't own factories offices or anything like this or don't even necessarily own tangible real assets that you can point to and hold, rather capitalism more and more and the capitalist class more and more have become merely just holders of shares, holders of these kind of financial assets that basically entitle them to a share of the total surplus value that's being produced in society, that's what we've moved more and more to is basically a capitalist now basically sees a piece of paper that all they care about is the rate of return on that investment that they've made and the capitalists just go and buy up whatever financial shares or debts or assets they can that guarantee them the biggest or the total will guarantee them the biggest rate of return and so now the capitalism become more and more abstract and the capitalist class is less and less these business owners are more and more people who just own wealth basically and it's been reduced to a very pure form if you like of capitalism, just literally the owning of money but as I said earlier it's not that obviously anyone who owns money is a capitalist owning shares does not make you really even a capitalist because obviously only a small minority of people as I said actually have enough shares that they could live off the income stream of those and really what shares represent is not a move to diversify the economy or to make everyone a capitalist, this is sometimes what you hear being put forward in magazines like The Economist which are really the serious mouthpiece of the liberal bourgeoisie really they are always saying the way to get rid of inequality is for everyone to become a shareholder everyone to become a capitalist but really for the vast majority of us if we have pensions or savings that are invested in these financial assets doesn't make us a capitalist what it actually does is far from diversifying and fragmenting capitalism actually concentrates wealth even more because who has access to these shares they really represent it represents the ability for the capitalist to now gain access to all our savings for all these small amounts of money that we've accumulated privately and personally to now be conglomerated together in these pension funds in these hedge funds in through the banks and so forth and the capitalist therefore have managed through the financial industry turn all money into capital that's really what the role of credit and all these assets represents the ability to turn all these individual fragmented quantities of money into something that's quality difference into capital that can be used for them to gain access to and make a profit so what I'm really trying to emphasise with this whole process actually is that there is no fundamental separation between capitalism and finance there's no responsible capitalism that's never had this kind of tumour of finance attached to it it's not like the financial industry we see today it's some sort of parasite on the side of capitalism this otherwise benevolent system that we can just kind of chop away at you know this is what you see being put forward by reformists the idea that we can have good capitalism without the bad financial speculating side of it but the fact is they've been completely intertwined ever since the early days of capitalism and they will continue to do so to get rid of the bad capitalism is really to try and get rid of capitalism as a whole now what we see today is these financiers themselves have really taken control of the whole society we see the example of Greece is a stark expression of that but this isn't new either actually in fact in the 17th century the end of the 17th century 1694 I think it was you had the creation of the bank of England which was actually a private bank at the time basically the different capitalists came together but the government was completely bankrupt in Britain having waged war with the French and it needed to borrow money off the lenders but the problem was the kings and queens of the past had always had a tendency to default on the debts to the owners of money so the bank of England basically was formed by the rich coming together we'll lend you this money but it is going to be lent you're going to have to return it with interest to us and that interest is going to be paid out of the future taxes you collect from other people and in return we also want privileges we want to be able to print money we want to have exclusive banking rights and that's basically where the bank of England came from from the capitalist class asserting its power so really you see actually this process is a historical fact of how the capitalist class takes over the state itself how the government becomes actually beholden to the capitalist as early as 1694 as I said in feudal times the kings and queens would default on their debts and the lenders could do absolutely nothing about it really but alternatively kings and queens then or the state could just go and obviously appropriate wealth could just say we're going to take your wealth in the form of taxes but now here you have an extraordinary development where rather than seeing their wealth merely taken away from them and never to be seen again the capitalist class now turn the tables on the state and say no no longer are you taking our wealth but now you've got to borrow it and pay it back with interest and so suddenly you see this complete inversion of power and actually shows you the farcical nature of national debt which develops with the banking system money clearly the fact that there's someone lending the money shows the money exists it shows that there is the wealth out there to pay for the things that are needed but obviously exists and it's under it's tightly controlled by the capitalist class and this is most obvious in Greece where there's an enormous amount of wealth obviously there's an enormous amount of wealth that could be used to take Greek society forward but rather they're completely beholden to the money lenders in form of the troika and in fact there's this ridiculous situation now where the IMF in the troika and so demand austerity why so that the Greeks will pay back the money will be able to be lent rather more money from the IMF to pay back the IMF the money so you've just got this circle where all the money the Greeks are being lent is just going back to the very people who are lending the money in the first place now to understand the banking system further we have to go back and look at the evolution of money further as well as I said the precious metals emerged as the universal equivalent and you get the development of coins specific quantities of the precious metals representing certain amounts of value and these are backed up by the state which guarantee their value and their legitimacy but so only the state had the power to create money that's why you see the idea of sovereigns coins with the head of state actually stamped onto it and today obviously we have the Queen's head guaranteeing the legitimacy of our paper notes now again as I said before the problem is that the ruling class of old and in fact today as well had a tendency to get into debts and would try and get out these debts by basically just creating money reducing the value of gold or silver that was in the coins but the result of this was you actually just got inflation basically increasing the money supply through this process of what we call debasement debasement just literally means reducing metallic content that's where the term comes from in terms of inflation today all it did was the more they printed money or created money the more inflation it would create we see that phenomena as well in places like Weimar Germany where in the early 1920s in order to try and basically pay off its war debts its reparations the German government just borrowed and printed more and more money and the result was this hyperinflation that actually completely devaluated the currency to the point where people were wallpapering their money wallpapering their houses with money because the actual paper was worth less than the value that was written on it and basically the money was worth less than the value of the paper itself sorry now what this kind of shows is that the quantity of money in circulation isn't some arbitrary thing that the state can decide there has to be a material basis to the money supply and to the whole economy and the money supply really has its own laws and logic if you like which assert themselves dialectically if you try and play around with this then it comes back and bites you somewhere else if you try and get out of debts by printing money you end up just getting inflation which erodes away the living standards of others and that sense the quantity of money has to be linked to something material it has to be linked ultimately to the value of the commodities in circulation in society and the money supply without doubling the value of the commodities in circulation the result will just be a doubling in prices all else being equal now originally money was this commodity money it was the money itself was a commodity that had a value and the gold and silver coins were valuable because they were gold and silver and they contained precious metals that were hard to obtain and difficult to mine and so forth and the money supply in that sense was kept and prices in turn were kept very regulated by the fact that gold and silver were generally in limited quantities although there were cases like in Spain the Spanish Empire when there was a conquest of Latin America or South America there was such an influx of gold from this conquest that actually ruined the Spanish economy by basically creating enormous amounts of inflation and uncertainty now at a certain point coins ceased to basically have the actual metallic content that they claimed to represent and money became more of a symbol symbolic money a token of entitlement to gold somewhere that was somewhere else in the banks and eventually as production expanded the money supply expanded there was a move away from the metals towards paper money which basically played the same sort of role and today obviously we've gotten rid of paper money even in many cases and we just have digital currencies or other money that is just on a screen it's a money of accounting to be able to tell you how much various people owe to each other nevertheless the money supply even when it moved to being representative kind of symbols it was always backed up by gold it was backed up the money that was issued the notes that were issued by the Bank of England were backed up by gold in the bank itself and this prevented money supply from being rapidly expanded because it had to be tied to the amount of gold that the country owned and with this system and as you get more and more international trade in the 19th century you get the emergence of the gold standard basically where different countries all tie their currencies to gold and in doing so you could obviously go from one country to the other and be able to directly compare prices and this was particularly facilitated by the dominance of imperialism and British imperialism in particular which obviously required this international trade and comparison of prices and so forth but the gold standard whilst giving a certain stability to the economy throughout the 19th century backed up by the stability really of British capitalism, British imperialism nevertheless it became unstuck precisely when the whole economy became unstuck at the time of World War I when different countries basically in order to try and fund the war would start borrowing and printing enormous amounts of money leading to large inflation and the gold standard couldn't any longer handle all these kind of international imbalances in the situation you had different countries, different imperialist powers different advanced capitalist countries with different levels of productivity different levels of trade and competitiveness and basically the money supplies were being pulled in different directions all the different countries basically and this was exacerbated more and more with the Great Depression which ultimately led to the end of the gold standard all these different currencies couldn't be pegged to gold anymore because people were trying to, the different states were trying to print money in order to get out of the crisis to stimulate the economy by printing more money by increasing liquidity, giving the banks more money to lend and the only way they could do that was to come off the gold standard in order to be able to expand their money supply and really what this was was an attempt to export the crises that different countries were going through at the same time you had a global crisis of capitalism both after the First World War and then really hitting its peak with the Great Depression all these different countries trying to get out of these limits these national limits, this straight jacket by exporting the crisis elsewhere fundamentally devaluing their currencies so they could increase competitiveness export more, trade more and doing so basically grow their economies at the expense of others it was what we call beggar thy neighbour policies and eventually this led to the complete collapse of the gold standard in the Great Depression and by the end of the Second World War what emerged was a new international system called the Bretton Woods which was basically a system that came up largely by John Maynard Keynes the British Economist but it's an international treaty that said basically the dollar would now be the new world currency and all the other currencies would be pegged to the dollar but the only reason they could really do this was because the dollar itself was as good as gold two thirds of the world's gold was in Fort Knox and America was the dominant world capitalist superpower emerged really unrivaled in the capitalist world and it was able to use this kind of hegemonic position to break open trade barriers, to expand trade and with the strength of the dollar basically allowed American capitalism to massively expand world trade expanded, you had the post-war boom and there was again a certain stability to the whole system the whole economic system brought about as a result of this but that stability again turned into its opposite at a later stage where as American imperialism started to go into decline it started to have to spend more and more to keep its role in the world in particular in the late 60s you had the Vietnam war with massive levels of military spending Keynesian spending really inflationary policies on behalf of the American government and all of this huge amount of money being poured into weapons and military created huge inflation in the American economy and because all the other countries were tied to the dollar it created inflation throughout the world not to mention the fact that many other countries including Britain were also enacting these Keynesian policies the government spend of demand management inflationary policies basically were pumping money into the economy but without the commodity production actually increasing at the same pace and eventually this led to the Britain was collapsing as well in the 70s pushed over the edge ultimately by the world crisis that came about in 73, 74 and the enormous oil shocks from the Middle East and there was a move then to floating currencies dramatically adjusting currencies and exchange rates on the basis of supply and demand for these different currencies and that reflected the competitiveness of different countries if country was devalued its currency it became more competitive on the world market but whilst devaluation was able to improve competitiveness of a country in the short term all it did was to basically help economies grow through exports but it led to two different things one it meant internal inflation now not only were your exports cheaper and allowed you to export more but rather you also now had more expensive imports which would obviously hit the real value of wages in a country more importantly, as importantly was the fact that really all this did was as I said earlier it exports the crisis elsewhere it wasn't really resolving the crisis on a world scale but rather just basically one country trying to trade its way out of crisis export its way out at the cost of another and the point in here and this is what's very relevant when you see the debates around the euro crisis today they constantly call for countries to basically increase their competitiveness and by that they mean drive down wages and they can produce less than capitalists in other countries but the point is competitiveness is a relative term you can't all be the most competitive you can only be more competitive than someone else and there's always under an international capitalist system with international trade you're always going to have some people who are net exporters some people who are net importers there's always going to be basically winners and losers the fact is that these imbalances this instability you see can only ever be transferred around within the capitalist system all capitalist nations can do through their competition with one another is basically, as I said, beggar thine aid but get out of a crisis at the expense of others they really demonstrates what an enormous barrier the nation state has become in this current day and age where you see these global crises emerging and all these different nations, just like the different capitalists are just competing against each other at the expense of one another now, the collapse of Keynesian policies the collapse of Bretton Woods led to the monetarist revolution in the 70s and 80s embodied theoretically in people like Milton Friedman and obviously politically in people like Thatcher and Reagan who basically said that inflation was a scourge that had to be combated by supply side policies in other words, keep the supply of money low and fixed and basically tackle the sources of rising costs in what they saw as being fundamentally the problem of rising wages they blame the trade unions for causing inflation by demanding wages that were higher and higher in fact it was the other way round you had inflation because of costs of production elsewhere with oil prices going up and all workers were trying to do was really keep up with that by going and striking and demanding better wages but this monetarist revolution was used as an excuse to attack the working class and basically keep wages down in order to keep profits high now at the same time as this obviously you then had this problem of overproduction again the capitalist had to resolve and the way around it was this expansion of credit that talked about earlier and 2008 really marked the end of monetarism as a hegemonic theory and all these accumulated contradictions have come to the fore we see now all the same limits and contradictions of the gold standard re-emerging in the eurozone where all these different countries are pegged to each other and this is one currency and there's no way of them getting out there's no way of them improving their competitiveness other than to basically have what we call internal devaluation which is attack the wages in your country rather than devalue the currency and so forth and actually the Marxists predicted the euro crisis much earlier on back in the 90s you can read articles on indefensive Marxism Alan Woods and Ted Grant where they pointed out that the eurozone would work as long as everyone was benefitting as long as the general economy was moving forwards and all these countries were moving in the same general direction the eurozone would work but as soon as the crisis hit you'd have different countries moving at different paces in different directions and all these contradictions would come to the fore and as I say the result would be that the less competitive countries would have to actually internally devalue by attacking wages and driving down the conditions of workers and really it's that, this internal devaluation that's the real meaning behind the austerity we see in Greece and Spain today now elsewhere and in fact across all the globe right now the ruling class doesn't really have any solution to the crisis they found themselves in particularly in the question of money all the traditional monetary policies in the past have failed now, there's no way out with these tools anymore interest rates would used to be used to stimulate investment but now they're already at zero and there's still no investment this is why you see this kind of desperate and empirical attempt to overcome the crisis through increasingly desperate measures with the latest one obviously being quantitive easing where the central banks basically under instructions from governments buy up government debt and buy this from other banks and basically by taking these assets, by printing money and taking these assets off the banks the banks then should have extra money that they can use to lend out for investment and for household consumption so forth and the idea is this should stimulate growth but at the same time obviously Keynesian policies have failed to work because of the existing massive public debts that are existing that are there already but the problem is businesses aren't investing in fact investments are at an all time low because it's not a lack of money that's the problem there's huge amounts of money actually sitting in bank accounts the biggest businesses in Britain sit on something like 250 billion pounds in the US there's 2 trillion dollars sitting in the bank accounts of the biggest businesses in America 2 trillion euros in European big businesses bank accounts in fact Apple alone in the US has something like 200 billion dollars of cash reserves that it doesn't invest it just sits there it's idle money so the problem isn't the lack of money the problem is the enormous excess capacity in the system this enormous contradiction of over production where basically no one will invest because there's already too much being produced and so instead all this money sloshing around rather than going to invest and grow the real economy all this quantum easing and so forth all this extra money being pumped into the system all it's doing is causing massive amounts of speculation speculation in art, in wine, in whiskey, in gold in whatever commodities they can find in onions you had speculation onions in a few years back and this is a constant attempt for the capitalist to find some sort of store of value, some sort of safe haven for their money and quantum easing is just leaking money into the global economy and blowing up asset prices, speculative bubbles particularly in Asia and so forth and in fact therefore rather than overcoming the crisis what this does is actually just generally create more and more instability in the world economy so what we see from the last 100 years of monetary systems and monetary policies is that at a certain point they always reach their limits initially there are sources of stability and allow for an expansion and growth of the productive forces and of trade and the market but eventually these strengths always turn into their opposites and the money system becomes a source of global economic instability and at these kind of crisis points you get a paradigm shift if you like where you see the money monetary policy where suddenly some new theory comes in to replace the old one that's what you see with the move from the gold standard to Bretton Woods to floating exchanges to the Eurozone and quantum easing all of these occur in response to a crisis and a failure of the previous system, contradictions building up but really the real crisis is not in the monetary system itself or the money policy the real crisis is the crisis of capitalism which reflects itself in a crisis of the monetary system it's the general crisis of capitalism with all these contradictions building up that exposes the flaws and the weaknesses of this or that system and in that sense it's the underlying crisis of capitalism that's the root problem and today you get all these people talking about different theories of money and different proposals for how to get out of this crisis relating to it but they're always attacking the symptoms of the problem and never really the root cause itself because it's not money that is the root of all evil as the Bible says, it's capitalism that's the problem you've seen people proposing a return to the gold standard because they can see the effects of just printing money and the impacts that has but the point is that inflationary policies by governments today are an attempt to overcome the overproduction and the economic crisis within the confines of capitalism itself you see campaigns like positive money some people might have seen this campaign positive money which campaigns for the banking system to be brought back under democratic control and for banks to lend money only for real production for real consumption rather than for speculation and to making profits but again the point is that the vast expansion of bank lending not just because there's greedy bankers in charge but rather it's a response to the demands of capital itself to constantly expand and to grow and the lack of lending for real investment actually just reflects the lack of profitable opportunities because of the global overproduction that exists that's why as I said you've got this orgy of speculation and a situation where the stock market is completely divorced in terms of the value of the stock market to the real value that's there in the real economy elsewhere we see these kind of anarcho libertarians kind of utopian types who look for a solution in things like bitcoin digital currencies which they think by taking the power of banking out of the hands of the state the malevolent state this will resolve the problems but again things like bitcoin have not proved any solution either they've actually just become vehicles for speculation because it's not, again it's not the problem of meddling central banks that's the problem here but the anarchy of the capitalist system itself and these kind of utopian experiments can't really do anything about that so really to get rid of all of these symptoms of the evils of money means actually to get rid of money itself but to go back to where I started money is not something that was invented if you like it emerged from historical conditions and it can't just be invented away either money can't simply be abolished but we have to look at the historical roots of money to understand how it can actually be gotten rid of and that means going back to the understanding that money arises out of the idea of commodity production exchange itself money represents value and value is a property of commodities emerging out of their exchange it's a dialectical property emerging out of exchange between people in the market to get rid of money means to get rid of commodity production and exchange itself and that means returning to a communist society to a society where there is again communal ownership over tools over the wealth and technology in society but again like I say this isn't going to be a primitive communism that we wish to return to but a communism on a higher level based on a society of superabundance so money will not be abolished overnight like the state or class society or human nature in general it will wither away there will be a transitional period between socialism a kind of lower stage of communism if you like and communism as a higher stage socialism begins with the taking of the main levers of the economy the commanding heights into the hands of the working class and putting them under a plan of production a rational democratic plan in the control of the working class itself and the more and more of the economy you bring into a socialist plan of production the less and less there is in private hands the small producers who are on the fringes of the economy you know not big business but you take over by nationalisation and putting under workers control the small producers on the fringe the petty bourgeoisie if you like will be incentivised to join the socialist plan because of its efficiency its guarantee of a better standard of living and the more and more that you bring the economy under this plan of production the more and more you take it out of private ownership the more and more you're abolishing commodity production exchange and the less and less need there is therefore for money to act in these exchanges the products of labour now become socially owned as well as socially produced and we see the end of commodities themselves now we can already see this process actually within capitalism itself like all the ideas of what a future socialist society will look like we can see it today already today already as well as the wage that you receive the money you receive to be able to buy the commodities you need in exchange for the work that we do we also have a social wage if you like a wage that we never really see but in other words goods and services that we receive for free because of things that have been brought into nationalisation the health service is a perfect example at the moment, fingers crossed in Britain people don't have to pay for their healthcare you can walk into hospital and no money is ever exchanged between you and the hospital now imagine that same sort of process but now expanded to housing to our heating and our transport to our food and our clothing in other words bringing these main levers of the economy into a social plan of production whereby we can walk into shops we can walk into a house and know that the things we need are there for us and that they're there in exchange for us contributing to society with the work that we do and that in a sense the social wage that you never see would gradually increase and increase and the actual wage you need to buy things would be reduced to just luxury items and eventually be eliminated altogether as luxury items also were brought into a plan of production in fact cease to be luxuries at all so as commodity production withers away so the need for money withers away also and in its early stages price signals would basically just be used to indicate where there's scarcity where you'd still have banks that would accumulate the wealth in society that's being produced but now rather than prices being used to tell capitalists where they can make their profits be used to show where there's a need for more investment by the socialist state by the socialist banks and the money obviously would still have to have some sort of material basis to it in fact Trotsky points out in the Revolution Betray how the Soviet economy under Stalinism they thought they could just still print money at will they thought they were masters of the universe and actually they ended up just causing massive inflation in the ruble that was the scourge of the socialist plan of production so no we'd still have money but it would be anchored to real production and it would be under the control and the genuine democratic control of the workers state and there'd be an enormous level of planning that we already see actually in society inside these giant multinationals but now rather than being used to make profits it'd be used to plan the economy on a global scale and get rid of the anarchy and the chaos of the market rather than representing exchange value in other words socially necessary labour time money would more and more just become a token basically an entitlement to the share of the common pot kind of like what you see actually with rationing in World War II where you obviously had this was kind of a similar thing but again on a low level of economic development where there was scarcity of resources but now we're talking about super abundance where these tokens represent a share of the wealth produced in society and eventually as scarcity is eliminated such tokens could be eliminated also people become accustomed to a world of plenty where you walk into a shop, take what you need and there's plenty there the next day for others to take as well all our needs would be taken at free, you know all our needs would be free to take at will because we know that scarcity is an aberration of the past and we'd be able to live according to Marx's maxim that you put forward of each according to their ability from each according to their ability to each according to their need under capitalism the ruling class pedals this myth that basically justifies capitalism that says it's the only way of doing things it's the only system that ever has exist and never can exist and they try and legitimise and justify this exploitative and unjust system they tell us capitalism is freedom and that it's inevitable because of human nature but as I said if we apply a Marxist method we can see that different societies come and go that in fact far from being free actually we're in chains in chains everywhere around us there's the struggle, the daily struggle to make ends meet we see Greece which is far from being free where people are being able to carry out the policies they voted for they're being told what to do by the capitalist and their representatives in form of the troika so in other words far from being free everywhere we're in chains, we're in the chains of debt and chains to the banks and the capitalist and it's only under socialism really that you would gain real economic control and with it real freedom in a genuine sense we'd be free finally from the power of capital and from the invisible hand and just to sum up in the words of Engels we would ascend from the kingdom of necessity to the kingdom of freedom I'll leave it there