Society depends on relationships among producers engaged in on-going activity, but the social producers themselves relate primarily in our society through commodities.
The exchange of commodities is the means by which relations among producers are established and reproduced. Exchange relations are fetishistic expressions of social relations of production. We know but we forget that the cup of coffee in front of us puts us in complex relation with social producers all over the world, yet we fetishize the thing itself in relation to our needs. Yet when people exchange things, they express their dependence and distribute claims on social labor. When our social relations of production are established and reproduced through commodity exchange relations, we cannot but relate through things. The most basic form of this fetishistic relation is the way in which we find the social *value* of what we have to alienate by *the physical quantity of the use value* for which it does exchange. We know the value of our own commodity only relative to the quantity of use value for which it exchanges. Our relations are through things, not direct social relations of production. For example, I come to know the value of linen that I have produced by the number of coats for which I can exchange it. The exchange relations of these things obscures the relations between the producers. To skip some steps ahead, the expression of value is always relative except for the one commodity in which all others universally express their value, as a physical quantity of that use value. The worth of that universal commodity is always expressed, first and foremost, as itself. If it's coats, we say the value of 5 coats is 5 coats. If it's gold, we say the value of one gram of gold is one gram of gold. In having the value of all other commodities expressed, manifested and reified in terms of it, the universal commodity alone can acquire immediately any other commodity because it alone already represents the social labor time on which we all depend and of which all sold commodities are some partial expression. Marx brings money down to earth as itself only a representation of the social labor on which we all collectively depend and of which it is but one form, but since it is the only representation of social labor, gold is not reduced to trivial significance as Adam Smith had done in his critique of mercantilism. Money, qua the universal equivalent, acquires properties by way of social relations of production organized as relations of things that can both facilitate and sabotage exchange. Having a universal equivalent allows the overcoming of the problem of the double coincidence of wants, but a universal equivalent that alone directly represents social labor in the abstract is also something for which all other commodities would be sold in a time of panic. As a social technology, money is thus both a force of production and destruction. So let us look at money more closely. All commodities appear to express their value in gold because gold is the universal equivalent, yet gold is the universal equivalent only because all other commodities can only realize or actualize their respective values relative to it. People go the museum to see art works but works become art only because they have been placed in the museum. Duchamp's urinal. Gold appears to be value itself only because it conquered the place of the universal equivalent for which a society organized around repeated commodity exchanges had a need. Gold by its nature is not money, but money by its nature is gold. It best has the properties to be a universal equivalent--relaively durable in both physical and value terms, divisible, light. Marx referred to gold as a fetish because he thought humanity would grow out of this exaltation of an object that had emerged from the world of ordinary commodities only through repeated exchanges to transcend it as primus inter pares. Especially when that object went from facilitating exchange to becoming an object of irrational, socially destructive devotion. Marx seems to have been wrong that the fetish of gold could only be discarded if commodity production itself was also transcended. He wrote fierce critiques of radical monetary reformers who wanted to replace gold with a scheme of labor time chits and warehouses (there was a fine essay on this by Alfredo Saad-Filho back in 1994 in the History of Political Economy, and it explains carefully Marx's reasoning here). Marx thought that as long as there was commodity production there was a need for a commodity as a universal equivalent. Perhaps that inflation targeting has been the primary objective of monetary policy shows that the system cannot break really from commodity money. Allowing only the most minimal inflation, the Fed attempts to keep money stable to vis-a-vis a basket of commodities (James Baker recommended this in the 80s) or in terms of a price index. In this sense as Eichengreen explains inflation targeting is not so far from commodity money. "Any kind of rigid monetary rule would limit what the government could do. But if you are serious about this, why peg the dollar to gold? Why not peg it to a basket of commodities? There's nothing intrinsically different about gold from silver, copper, platinum, wheat, tobacco, automobiles, et cetera. You could also just target the consumer price index. There are central banks that do that. It's called inflation targeting. Targeting rules are a way to be sure that you get price stability and you can write them into the Constitution or the central bank statute. But what they eliminate, of course, is flexibility and the ability to respond to unanticipated events. With a monetary rule, the mint's printing presses would click on or click off in response to the latest information on gold prices or consumer prices or whatever you are targeting. But what happens when there is a problem in financial markets -- for example, a Lehman Brothers bankruptcy -- and you have to flood the markets with liquidity? That's what a central bank sometimes has to do, to act like a lender of last resort, and that's what's wrong with the gold standard or any other simple monetary rule. There is no flexibility for doing that." But a flexible response is allowed only exceptionally. For example, there will be no QE3, and the Fed will seemingly return to hawkish inflation targeting even as the true unemployment rate remains scandalous and household finances are in disarray. After the stagflation of the 70s the Fed contained inflation, identifying that achievement with macroeconomic stability itself, though the number of financial crises and job insecurity grew. Still Marx's theory of money has fundamental difficulties with fiat money, and I would not be surprised if as the crisis worsens the Fed does set an inflation target of up to 4% as the "left" is proposing. That would drive the dollar down, bolstering net exports directly and indirectly via a reduction of the real wage through price inflation. That is, a neo-mercantilist politics of competitive devaluation or currency war is on the horizon. But it's difficult for me to see how Marx's own theory based (it seems on a commodity theory of money) and (for the most part) on the idealization of world capitalism as one capitalist society could make sense of competitive devaluations of nation-states.
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