Market exchange
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"Marx's 3 Forms of Market Exchange" with Richard D. Wolff |
Market exchange occurs whenever a commodity is bought and sold. Most markets rely on sellers offering their goods or services (including labour) in exchange for money from buyers.
Distinguishing characteristics
Distinguishing characteristics of market exchange include:
- In the exchange of goods on the capitalist market, exchange-value rather than use-value dominates. As such, in a market setting, values are transformed into prices.
- Market exchange takes place where the money-form of social relations between things and the material relations between things collapse together.
- Marx's labour theory of value is arguably best seen as a "law of grand averages", an overall generalisation about economic exchange based on socially necessary labour time.
- To Marx, capitalism is tied to the alienation of workers from the means of production: they no longer own what they need to make a living and so must sell their labour in the "free" market to earn money to buy their subsistence needs.
Types
Marx classifies several types of market exchanges:
| Formula | Explanation |
|---|---|
| M-C | An act of purchase: a sum of money purchases a commodity, or "money is changed into a commodity." |
| C-M | An act of sale: a commodity is sold for money. |
| M-M' | A sum of money is lent out at interest to obtain more money, or, one currency or financial claim is traded for another. "Money begets money." |
| C-C' | Countertrade, in which a commodity trades directly for a different commodity, with money possibly being used as an accounting referent, for example, food for oil, or weapons for diamonds. |
| C-M-C' | A commodity is sold for money, which buys another, different commodity with an equal or higher value. Money is used as a medium of circulation. |
| M-C-M' | Money is used to buy a commodity which is resold to obtain a larger sum of money. |
| M-C...P...-C'-M' | Money buys means of production and labour power used in production to create a new commodity, which is sold for more money than the original outlay. "The circular course of capital." |