 Thus, gold and silver are the first applications of value constituted ... by M. Proudhon. And as M. Proudhon constitutes the value of products determining it by the comparative amount of labour embodied in them, the only thing he had to do was to prove that variations in the value of gold and silver are always explained by variations in the labour time taken to produce them. M. Proudhon has no intention of doing so. He speaks of gold and silver not as commodities, but as money. His only logic, if logic it be, consists in juggling with the capacity of gold and silver to be used as money for the benefit of all the commodities which have the property of being evaluated by labour time. Decidedly there is more na vet than malice in this jugglery. A useful product, once it has been evaluated by the labour time needed to produce it, is always acceptable in exchange; witness, cries M. Proudhon, gold and silver, which exist in my desired conditions of exchangeability"! Gold and silver, then, are value which has reached a state of constitution: they are the incorporation of M. Proudhon's idea. He could not have been happier in his choice of an example. Gold and silver, apart from their capacity of being commodities, evaluated like other commodities, in labour time, have also the capacity of being the universal agents of exchange, of being money. By now considering gold and silver as an application of value constituted by labour time, nothing is easier than to prove that all commodities whose value is constituted by labour time will always be exchangeable, will be money. A very simple question occurs to M. Proudhon. Why have gold and silver the privilege of typifying constituted value ? Straight away, by formulating the question in these terms, M. Proudhon has presupposed the existence of money. The first question he should have asked himself was, why, in exchanges as they are actually constituted, it has been necessary to individualize exchangeable value, so to speak, by the creation of a special agent of exchange. Money is not a thing, it is a social relation. Why is the money relation a production relation like any other economic relation, such as the division of labour, etc.? If M. Proudhon had properly taken account of this relation, he would not have seen in money an exception, an element detached from a series unknown or needing reconstruction. He would have realised, on the contrary, that this relation is a link, and, as such, closely connected with a whole chain of other economic relations; that this relation corresponds to a definite mode of production neither more nor less than does individual exchange. What does he do? He starts off by detaching money from the actual mode of production as a whole, and then makes it the first member of an imaginary series, of a series to be reconstructed. Once the necessity for a specific agency of exchange, that is, for money, has been recognized, all that remains to be explained is why this particular function has developed upon gold and silver rather than upon any commodity. This is a secondary question, which is explained not by the chain of production relations, but by the specific qualities inherent in gold and silver as substances. If all this has made economists for once "go outside the domains of their own science, to dabble in physics, mechanics, history and so on, as M. Proudhon reproaches them with doing, they have merely done what they were compelled to do. The question was no longer within the domain of political economy. This economic reason which nobody with good ground indeed has seen or understood, M. Proudhon has seen, understood and bequeathed to posterity. To say that, of all commodities, gold and silver were the first to have their value constituted, is to say, after all that has gone before, that gold and silver were the first to attain the status of money. This is M. Proudhon's great revelation, this is the truth that none had discovered before him. If, by these words, M. Proudhon means that of all commodities, gold and silver are the ones whose time of production was known the earliest, this would be yet another of the suppositions with which he is so ready to regale his readers. If we wished to harp on this patriarchal erudition, we would inform M. Proudhon that it was the time needed to produce objects of prime necessity, such as iron, etc., which was the first to be known. We shall spare him Adam Smith's classic bow. But, after all that, how can M. Proudhon go on talking about the constitution of a value, since a value is never constituted by itself? It is constituted, not by the time needed to produce it by itself, but in relation to the quota of each and every other product which can be created in the same time. Thus the constitution of the value of gold and silver presupposes an already completed constitution of a number of other products. It is then not the commodity that has attained, in gold and silver, the status of constituted value, it is M. Proudhon's constituted value that has attained, in gold and silver, the status of money. Let us now make a closer examination of these economic reasons which, according to M. Proudhon, have bestowed upon gold and silver the advantage of being raised to the status of money sooner than other products, thanks to their having passed through the constitutive phase of value. These economic reasons are: the visible tendency to become dominant, the marked preferences even in the patriarchal period, and other circumlocutions about the actual fact which increase the difficulty, since they multiply the fact by multiplying the incidents which M. Proudhon brings in to explain the fact. M. Proudhon has not yet exhausted all the so-called economic reasons. Here is one of sovereign, irresistible force: Thus, the whim of sovereigns is for M. Proudhon the highest reason in political economy. Truly, one must be destitute of all historical knowledge not to know that it is the sovereigns who in all ages have been subject to economic conditions, but they have never dictated laws to them. Legislation, whether political or civil, never does more than proclaim, express in words, the will of economic relations. Was it the sovereign who took possession of gold and silver to make them the universal agents of exchange by affixing his seal to them? Or was it not, rather, these universal agents of exchange which took possession of the sovereign and forced him to affix his seal to them and thus give them a political consecration? The impress which was and is still given to money is not that of its value but of its weight. The stability and authenticity M. Proudhon speaks of apply only to the standard of the money ; and this standard indicates how much metallic matter there is in a coined piece of money. But the question: how much is an ounce of gold or silver worth, remains nonetheless. If a cashmere from the Grand Colbert stores bore the trademark pure wool, this trademark would not tell you the value of the cashmere. There would still remain the question: how much is wool worth? It has been proved times without number that, if a prince takes into his head to debase the currency, it is he who loses. What he gains once at the first issue he loses every time the falsified coinage returns to him in the form of taxes, etc. But Philip and his successors were able to protect themselves more or less against this loss, for, once the debased coinage was put into circulation, they hastened to order a general re-minting of money on the old footing. And besides, if Philip I had really reasoned like M. Proudhon, he would not have reasoned well from the commercial point of view. Neither Philip I nor M. Proudhon displays any mercantile genius in imagining that it is possible to alter the value of gold as well as that of every other commodity merely because their value is determined by the relation between supply and demand. If King Philip had decreed that one quarter of corn was in future to be called two quarters of wheat, he would have been a swindler. He would have deceived all the rentiers, all the people who were entitled to receive 100 quarters of corn. He would have been the cause of all these people receiving only 50 quarters of corn; he would have had to pay only 50. But in commerce 100 such quarters would never have been worth more than 50. By changing the name we do not change the thing. The quantity of corn, whither supplied or demanded, will be neither decreased nor increased by this mere change of name. Thus, the relation between supply and demand being just the same in spite of this change of name, the price of corn will undergo no real change. When we speak of the supply and demand of things, we do not speak of the supply and demand of the name of things. Philip I was not a maker of gold and silver, as M. Proudhon says; he was a maker of names for coins. Pass off your French cashmeres as Asiatic cashmeres, and you may deceive a buyer or two; but once the fraud becomes known, your so-called Asiatic cashmeres will drop to the price of French cashmeres. When he put a false label on gold and silver, King Philip could deceive only so long as the fraud was not known. Like any other shopkeeper, he deceived his customers by a false description of his wares, which could not last for long. He was bound sooner or later to suffer the rigour of commercial laws. Is this what M. Proudhon wanted to prove? No. According to him, it is from the sovereign and not from commerce that money gets its value. And what has he really proved? That commerce is more sovereign than the sovereign. Let the sovereign decree that one mark shall in future be two marks, commerce will keep on saying that these two marks are worth no more than one mark was formerly. But, for all that, the question of value determined by the quantity of labour has not been advanced a step. It still remains to be decided whether the value of these two marks (which have become what one mark was once) is determined by the cost of production or by the law of supply and demand. If this opinion, which M. Proudhon shares with the other economists, is valid, it argues in favor of the latter's doctrine of supply and demand, and in no way in favor of M. Proudhon's proportionality. For, whatever the quantity of labour embodied in the doubled bulk of gold and silver, its value would have dropped by half, the demand having remained the same and the supply having doubled. Or can it be, by any chance, that the law of proportionality would have become confused this time with the so much disdained law of supply and demand? This true proportion of M. Proudhon's is indeed so elastic, is capable of so many variations, combinations and permutations, that it might well coincide for once with the relation between supply and demand. To make every commodity acceptable in exchange, if not in practice then at least by right, on the basis of the role of gold and silver is, then, to misunderstand this role. Gold and silver are acceptable by law only because they are acceptable in practice; and they are acceptable in practice because the present organization of production needs a universal medium of exchange. Law is only the official recognition of fact. We have seen that the example of money as an application of value which has attained constitution was chosen by M. Proudhon only to smuggle through his whole doctrine of exchangeability, that is to say, to prove that every commodity assessed by its cost of production must attain the status of money. All this would be very fine, were it not for the awkward fact that precisely gold and silver, as money, are of all commodities the only ones not determined by their cost of production; and this is so true that in circulation they can be replaced by paper. So long as there is a certain proportion observed between the requirements of circulation and the amount of money issued, be it paper, gold, platinum, or copper money, there can be no question of a proportion to be observed between the intrinsic value (cost of production) and the nominal value of money. Doubtless, in international trade, money is determined, like any other commodity, by labour time. But it is also true that gold and silver in international trade are means of exchange as products and not as money. In other words, they lose this characteristic of stability and authenticity, of sovereign consecration, which, for M. Proudhon, forms their specific characteristic. Ricardo understood the truth so well that, after basing his whole system on value determined by labour time, and after saying: He adds, nevertheless, that the value of money is not determined by the labour time its substance embodies, but by the law of supply and demand only. This is what J. B. Say observes on this passage of Ricardo's: Thus money, which for Ricardo is no longer a value determined by labour time, and which J. B. Say therefore takes as an example to convince Ricardo that the other values could not be determined by labour time either, this money, I say, taken by J. B. Say as an example of a value determined exclusively by supply and demand, becomes for M. Proudhon the example par excellence of the application of value constituted... by labour time. To conclude, if money is not a value constituted by labour time, it is all the less likely that it could have anything in common with M. Proudhon's true proportion. Gold and silver are always exchangeable, because they have the special function of serving as the universal agent of exchange, and in no wise because they exist in a quantity proportional to the sum total of wealth; or, to put it still better, they are always proportional because, alone of all commodities, they serve as money, the universal agent of exchange, whatever their quantity in relation to the sum total of wealth. What an imbroglio this political economy is! cries M. Proudhon. [Vol. I, p. 72] The idea of making sheep and vines attain the status of money is not new. In France, it belongs to the age of Louis XIV. At that period, money having begun to establish its omnipotence, the depreciation of all other commodities was being complained of, and the time when every commercial value might attain its strictly exact determination, the status of money, was being eagerly invoked. Even in the writings of Boisguillebert, one of the oldest of French economists, we find: One sees that the first illusions of the bourgeoisie are also their last. Economists have fallen into this error through not knowing how to apply the law of proportionality and of constituted value." Unfortunately in the very same work by M. Proudhon, Volume I, p.110, we read the absurd hypothesis that, if wages rose generally, the price of every thing else would rise. Furthermore, if we find the phrase in question in works on political economy, we also find an explanation of it. Let us pass now to the second application of constituted value, and of other proportions whose only defect is their lack of proportion. And let us see whether M. Proudhon is happier here than in the monetarization of sheep. To prove that all labour must leave a surplus, M. Proudhon personifies society; he turns it into a person, Society a society which is not by any means a society of persons, since it has its law apart, which have nothing in common with the persons of which society is composed, and its own intelligence, which is not the intelligence of common men, but an intelligence devoid of common sense. M. Proudhon reproaches the economists with not having understood the personality of this collective being. We have pleasure in confronting him with the following passage from an American economist, who accuses the economists of just the opposite: Does M. Proudhon mean thereby merely that the production of the social individual exceeds that of the isolated individual? Is M. Proudhon referring to this excess of the production of associated individuals over that of non-associated individuals? If so, we could quote for him a hundred economists who have expressed this simple truth without any of the mysticism with which M. Proudhon surrounds himself. This, for example, is what Mr. Sadler says: To return to M. Proudhon. Surplus labour, he says, is explained by the person, Society. The life of this person is guided by laws, the opposite of those which govern the activities of man as an individual. He desires to prove this by facts. Now, we may even overlook the fact that M. Proudhon expresses a quadrupled speed as 400 per cent of the original speed; but that he should bring into relation the percentage of speed and the percentage of profit and establish a proportion between two relations which, although measured separately by percentages, are nevertheless incommensurate with each other, is to establish a proportion between the percentages without reference to denominations. Percentages are always percentages, 10 per cent and 400 per cent are commensurable; they are to each other as 10 is to 400. Therefore, concludes M. Proudhon, a profit of 10 per cent is worth 40 times less than a quadrupled speed. To save appearances, he says that, for society, time is money. This error arises from his recollecting vaguely that there is a connection between labour value and labour time, and he hastens to identify labour time with transport time; that is, he identifies the few firemen, drivers and others, whose labour time is actually transport time, with the whole of society. Thus at one blow, speed has become capital, and in this case he is fully right in saying: A profit of 400 per cent will be sacrificed to a loss of 35 per cent. After establishing this strange proposition as a mathematician, he gives us the explanation of it as an economist. Agreed; but we are dealing not with 400, but with 400 per cent, and a profit of 400 per cent represents for the individual 400 per cent, neither more nor less. Whatever be the capital, the dividends will always be in the ratio of 400 per cent. What does M. Proudhon do? He takes percentages for capital, and, as if he were afraid of his confusion not being manifest enough, pointed enough, he continues: A loss of 33 per cent for the consumer remains a loss of 33 per cent for a million consumers. How then can M. Proudhon say pertinently that the social deficit in the case of a 33 per cent loss amounts to 33 million, when he knows neither the social capital nor even the capital of a single one of the persons concerned? Thus it was not enough for M. Proudhon to have confused capital with percentage; he surpasses himself by identifying the capital sunk in an enterprise with the number of interested parties. To bring the matter home still more pointedly let us suppose in fact a given capital. A social profit of 400 per cent divided among a million participants, each of them interested to the extent of 1 franc, would give 4 francs profit per head and not 0.0004, as M. Proudhon alleges. Likewise a loss of 33 per cent for each of the participants represents a social deficit of 330,000 francs and not of 33 million (100:33 = 1,000,000:330,000). M. Proudhon, preoccupied with his theory of the person, Society, forgets to divide by 100, which entails a loss of 330,000 francs; but 4 francs profit per head make 4 million francs profit for society. There remains for society a net profit of 3,670,000 francs. This accurate calculation proves precisely the contrary of what M. Proudhon wanted to prove: namely, that the profits and losses of society are not in inverse ratio to the profits and losses of individuals. Having rectified these simple errors of pure calculation, let us take a look at the consequences which we would arrive at, if we admitted this relation between speed and capital in the case of railways, as M. Proudhon gives it minus the mistakes in calculation. Let us suppose that a transport four times as rapid costs four times as much; this transport would not yield less profit than cartage, which is four times slower and costs a quarter the amount. Thus, if cartage takes 18 centimes, rail transport could take 72 centimes. This would be, according to the rigor of mathematics, the consequence of M. Proudhon's suppositions always minus his mistakes in calculation. But here he is all of a sudden telling us that if, instead of 72 centimes, rail transport takes only 25, it would instantly lose all its consignments. Decidedly we should have to go back to the van, to the primitive waggon even. Only, if we have any advice to give M. Proudhon, it is not to forget, in his Programme of the Progressive Association, to divide by 100. But, alas! it is scarcely to be hoped that our advice will be listened to, for M. Proudhon is so delighted with his progressive association, that he cries most emphatically: Let us return to the fiction of the person, Society, a fiction which has no other aim than that of proving this simple truth that a new invention which enables a given amount of labour to produce a greater number of commodities, lowers the marketable value of the product. Society, then, makes a profit, not by obtaining more exchange values, but by obtaining more commodities for the same value. As for the inventor, competition makes his profit fall successively to the general level of profits. Has M. Proudhon proved this proposition as he wanted to? No. This does not prevent him from reproaching the economists with failure to prove it. To prove to him on the contrary that they have proved it, we shall cite only Ricardo and Lauderdale Ricardo, the head of the school which determines value by labour time, and Lauderdale, one of the most uncompromising defenders of the determination of value by supply and demand. Both have expounded the same proposition: Lauderdale, in his turn, says: If such a privilege is given for the invention of a machine, which performs, by the labour of one man, a quantity of work that used to take the labour of four; as the possession of the exclusive privilege prevents any competition in doing the work, but what proceeds from the labour of the workmen, their wages, as long as the patent continues, must obviously form the measure of the patentee's charge; that is to secure employment, he has only to charge a little less than the wages of the labour which the machine supplants. But when the patent expires, other machines of the same nature are brought into competition; and then his charge must be regulated on the same principle as every other, according to the abundance of machines.... The profit of capital employed..., though it arises from supplanting labour, comes to be regulated, not by the value of the labour it supplants but, as in all other cases, by the competition among the proprietors of capital that presents itself for performing the duty, and the demand for it. Finally, then, so long as the profit is greater than in other industries, capital will be thrown into the new industry until the rate of profit falls to the general level. We have just seen that the example of the railway was scarcely suited to throw any light on his fiction of the person, Society. Nevertheless, M. Proudhon boldly resumes his discourse: What now follows belongs to classical antiquity. It is a poetical narrative intended to refresh the reader after the fatigue which the rigor of the preceding mathematical demonstrations must have caused him. M. Proudhon gives the person, Society, the name of Prometheus, whose high deeds he glorifies in these terms: This Prometheus of M. Proudhon's is a queer character, as weak in logic as in political economy. So long as Prometheus merely teaches us the division of labour, the application of machinery, the exploitation of natural forces and scientific power, multiplying the productive forces of men and giving a surplus compared with the produce of labour in isolation, this new Prometheus has the misfortune only of coming too late. But the moment Prometheus starts talking about production and consumption he becomes really ludicrous. To consume, for him, is to produce; he consumes the next day what he produced the day before, so that he is always one day in advance; this day in advance is his surplus labour. But, if he consumes the next day what he has produced the day before, he must, on the first day, which had no day before, have done two days' work in order to be one day in advance later on. How did Prometheus earn this surplus on the first day, when there was neither division of labour, nor machinery, nor even any knowledge of physical forces other than fire? Thus the question, for all its being carried back to the first day of the second creation, has not advanced a single step forward. This way of explaining things savours both of Greek and of Hebrew, it is at once mystical and allegorical. It gives M. Proudhon a perfect right to say: The facts are the famous progressive calculation; the theory is the myth of Prometheus. In 1770 the population of the United Kingdom of Great Britain was 15 million, and the productive population was 3 million. The scientific power of production equalled a population of about 12 million individuals more. Therefore there were, altogether, 15 million of productive forces. Thus the productive power was to the population as 1 is to 1; and the scientific power was to the manual power as 4 is to 1. In 1840 the population did not exceed 30 million: the productive population was 6 million. But the scientific power amounted to 650 million; that is, it was to the whole population as 21 is to 1, and to manual power as 108 is to 1. In English society the working day thus acquired in 70 years a surplus of 2,700 per cent productivity; that is, in 1840 it produced 27 times as much as in 1770. According to M. Proudhon, the following question should be raised: why was not the English worker of 1840 27 times as rich as the one of 1770? In raising such a question one would naturally be supposing that the English could have produced this wealth without the historical conditions in which it was produced, such as: private accumulation of capital, modern division of labour, automatic workshops, anarchical competition, the wage system in short, everything that is based upon class antagonism. Now, these were precisely the necessary conditions of existence for the development of productive forces and of surplus labour. Therefore, to obtain this development of productive forces and this surplus labour, there had to be classes which profited and classes which decayed. What then, ultimately, is this Prometheus resuscitated by M. Proudhon? It is society, social relations based on class antagonism. These relations are not relations between individual and individual, but between worker and capitalist, between farmer and landlord, etc. Wipe out these relations and you annihilate all society, and your Prometheus is nothing but a ghost without arms or legs; that is, without automatic workshops, without division of labour in a word, without everything that you gave him to start with in order to make him obtain this surplus labour. If then, in theory, it sufficed to interpret, as M. Proudhon does, the formula of surplus labour in the equalitarian sense, without taking into account the actual conditions of production, it should suffice, in practice, to share out equally among the workers all the wealth at present acquired, without changing in any way the present conditions of production. Such a distribution would certainly not assure a high degree of comfort to the individual participants. But M. Proudhon is not so pessimistic as one might think. As proportion is everything for him, he has to see in his fully equipped Prometheus, that is, in present-day society, the beginnings of a realisation of his favorite idea. What is, exactly, collective wealth, public fortune? It is the wealth of the bourgeoisie not that of each bourgeois in particular. Well, the economists have done nothing but show how, in the existing relations of production, the wealth of the bourgeoisie has grown and must grow still further. As for the working classes, it still remains a very debatable question whether their condition has improved as a result of the increase in so-called public wealth. If economists, in support of their optimism, cite the example of the English workers employed in the cotton industry, they see the condition of the latter only in the rare moments of trade prosperity. These moments of prosperity are to the periods of crisis and stagnation in the true proportion of 3 to 10. But perhaps also, in speaking of improvement, the economists were thinking of the millions of workers who had to perish in the East Indies so as to procure for the million and a half workers employed in England in the same industry three years' prosperity out of ten. As for the temporary participation in the increase of public wealth, that is a different matter. The fact of temporary participation is explained by the theory of the economists. It is the confirmation of this theory and not its condemnation, as M. Proudhon calls it. If there were anything to be condemned, it would surely be the system of M. Proudhon, who would reduce the worker, as we have shown, to the minimum wage, in spite of the increase of wealth. It is only by reducing the worker to the minimum wage that he would be able to apply the true proportion of values, of value constituted by labour time. It is because wages, as a result of competition, oscillate now above, now below, the price of food necessary for the sustenance of the worker, that he can participate to a certain extent in the development of collective wealth, and can also perish from want. This is the whole theory of the economists who have no illusions on the subject. After his lengthy digressions on railways, on Prometheus, and on the new society to be reconstituted on constituted value, M. Proudhon collects himself; emotion overpowers him and he cries in fatherly tones: 
The Poverty of Philosophy - Chapter 1.3