The Natural Economic Order/Part V/Chapter 3

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If a commodity is to be burdened with basic interest it must of course be capable of bearing this burden, that is, it must meet with market conditions permitting the payment of its cost price, plus basic interest, out of its selling price. The market conditions must allow the circulation of money in accordance with the formula Money — Wares — Surplus Money.

This is obvious. For if it were not so, money would refuse to act as the intermediary of exchange, and the consequent embarrassment of producers would cause them to increase the difference between the cost price and the selling price of wares until the selling price, besides the other costs of commerce, could bear the cost of basic interest.

This whole process is automatic. For our traditional form of money, our medium of exchange, being by nature capital, allows no wares to enter commerce without its brand, so wares must necessarily always find the market conditions which permit them to appear as interest-exacting capital — at least to the consumer, since he pays the price which the producer receives, plus interest. To the producer, on the contrary, wares (his produce) must appear the reverse of capital (negative capital) since he receives the price paid by the consumer, less interest. Money has wrested this part of his produce from him. But a thing that must pay interest cannot properly be called capital. If commodities were capital, they would also be capital in barter, and can anyone imagine how interest could be exacted in barter?[1] Two forms of true capital, when confronted, neutralise each other. Rented land and money, for example, exchange for one another without interest. Each taken separately is capital, but they cannot meet each other as capital. Money, however, is always capital in relation to wares.

It should be noted that even to the consumer wares have only the appearance of capital; if he examines the matter more carefully he soon finds that wares are simply the quarry of money-capital.

Every producer is also a consumer, and just as in barter each party receives the other party's whole product, so every producer must at present regard the full price paid by the consumer as the return service for his own product. If he does this, wares must seem to him negative capital. Wares then appear in their true character namely as bank-messengers for money-capital. Wares collect basic interest from the consumer, not for the producer but for the possessor of money (medium of exchange), somewhat as a postman collects the price of a cash-on-delivery parcel. The weapon with which money arms its messenger is the power of breaking the connection between producer and consumer by withdrawal of the medium of exchange.

If the mediator of exchange, the capitalist, is deprived of the power of interrupting the exchange of wares for the purpose of exacting basic interest — as is achieved by Free-Money - money must give its services free of cost and the wares can be exchanged as in barter, without the payment of interest.

To facilitate the free exchange of commodities, the State at present charges the owners of bullion nothing for the conversion of their metal into coin. If the State substituted for this free coinage an annual payment for coinage of 5 %, money would really act free of charge as the instrument of exchange.


  1. Marx does indeed deduce capital in some mysterious way from barter!