Socialist Studies Socialist Studies

The Magic of Money

In his painstaking analysis of how capitalism works, the dynamics of commodity production, the role of money as a medium of exchange, Marx quoted - in his notebooks and later in CAPITAL (VOL I) - a ringing passage from Shakespeare:

Gold? yellow, glittering, precious gold? No, gods...
... Thus much of this will make black, white; foul, fair;
Wrong, right; base, noble; old, young; coward, valiant;...
... This yellow slave
Will knit and break religions; bless th'accurst;
Make the hoar leprosy ador'd; place thieves
And give them title, knee, and approbation,
With senators on the bench;...
... Come, damned earth,
Thou common whore of mankind, that putt'st odds
Among the rout of nations, I will make thee
Do thy right nature.

Timon of Athens

Now, in 2020, the US election of a president is to be decided - as so often - not by the character, ability and policy of the competing individuals, or the popularity of their parties. Like so many elections, a lot depends on the power of the purse. Just as so much Russian 'funny money' polluted the UK's 2016 Brexit referendum, and later that year the US election of Trump to the White House, now too the deep pockets of the Kremlin are in competition with the very deep pockets of Bill Gates and Michael Bloomberg.

In 2016, the gullible among the US voters were hugely impressed by Trump's apparent wealth and supposed success as a businessman. Yet this was a man who had to be sued by his victims for the 'Trump University' lucrative con-trick and in his shady past had succeeded in bankrupting even his casinos; whose business dealings as a developer had involved being in hock to the illegal racketeers of the Mafia; and whose word was so unreliable that many New York lawyers refused to take him on as a client (like many others, e.g. architects and other suppliers, they had found him refusing to pay his bills). Such dodgy American 'businessmen' are seen as 'grifters'.

Shakespeare's view of gold's power seems prophetic - wealth has the power to: "... place thieves / And give them title, knee, and approbation,..."

From Earth to Money

Gold starts out as simply a form of 'rare earth', to be mined like any other ore. Once mined it is processed. But this 'processing' is itself a dangerous and dirty business. A recent discovery of gold in the hills of an Armenian spa-town, with a Western company about to develop a mine, has roused fears. Imagine:

" a giant open-cast pit, stripping the top off one of the mountains above beautiful Jerrmak, home to our country's most beloved brand of mineral water. Using the 'heap leach' method, Lydian intends to pour liquid cyanide over vast piles of crumbled rock, washing the gold out
(PRIVATE EYE, no 1531, 25 Sept - 8 Oct 2020).

There are obvious environmental risks in this. But poisoning the environment and polluting your source of drinking water is nothing new. The same scenario was described by the 19th C playwright Henrik Ibsen in his 1882 play, An Enemy of the People. In a small town with a health-giving spa, it is found that the water is polluted by a nearby industry, so what to do? In the end it is decided to cover up the facts, and hope the town's trade - and visitors - continue as before. And to destroy the career and life of the town's whistle-blower Doctor. Such issues have led to conflicts and protests all over the world but always they seem to come out the same: capitalist interests ride rough-shod over all else. If groundwater is polluted, politicians can be bribed. Money rules. And the people and the planet suffer the consequences.

After processing, gold is then shipped away to be hoarded and guarded in the US in Fort Knox, in the UK in the vaults of the Bank of England. Some gold is supplied for the jewellery trade or for art, some for medicinal, industrial and research use. But its main use and its crucial importance is its economic functions – as currency, as medium of exchange, as a store of value, as a hoard.

When Shakespeare wrote and for many centuries after, gold was used as currency. If in a Shakespeare play, someone's purse is stolen, that purse like as not contained gold coins. Such coins could be used in trade to buy everyday commodities, and then gold served as a 'medium of exchange'. You could change one gold coin for several silver coins, or for food, drink, clothing, and rent, and to pay wages. Like any form of money, gold served as a 'universal equivalent'.

From this it is clear that money of any sort serves as a lubricant to oil the engine of capitalist trade, just as credit does. Gold was selected for this role as it does not rust, is easily converted into different types of coin and is easy to carry. Nowadays gold is no longer used as everyday currency and has been largely replaced by paper currencies, which seem to have only the loosest connection with gold as a reserve, and credit cards, with even less connection.

Gold however is still hoarded. Shakespeare's Timon himself was a hoarder: ruined and bankrupt, unable to pay his debts, he had fled the city and, digging for edible roots to eat, found gold which he hoarded, buried in the ground, until he could find a way of buying his revenge. Today, governments hoard their gold and use it to finance their wars - to buy their revenge.

"Money has no smell"

As the universal equivalent, money is unique. As Shakespeare noted, it had the amazing ability to conceal the often sordid or criminal origins of wealth: "... Thus much of this will make black, white; foul, fair; / Wrong, right..."

In our own time, banks and finance houses have developed a criminal culture of industrial scale 'money-laundering', with networks circulating mysterious slush funds from thousands of shadowy shell companies, whose real ownership and origins are carefully shielded from the authorities. Compliant governments seem to turn a blind eye and even to act as enablers as, among others, Russian 'oligarchs' and Putin's placemen export their ill-gotten gains.

The World's Money Laundromat

A recent special report, Carry on laundering - How Britain's wash cycle keeps crime bosses and kleptocrats in business and in power (PRIVATE EYE, no 1531 25 Sept-8 Oct.2020) details a lot but is clearly just the tip of the iceberg.

In post-Soviet times, Russia's rulers have been creaming off the wealth of Russian business, especially its 'black gold', the ever-flowing oil and gas. The country's export earnings could have been used to improve its run-down health service - almost collapsing in the rural areas where hospitals seem to rely mainly on charity and funds raised from the public, and where Covid 19 testing and treatment systems are, to put it mildly, chaotic. Corruption is rampant so that funds, supposedly allocated for infrastructure projects, e.g. to improve the dreadful roads in the regions, somehow are mysteriously transmuted into expensive Western real estate, school fees at Eton, inflated prices for art and jewellery at Christy's or Sotheby's, or funding the super-rich in their extravagant lifestyles, with their private planes and super-yachts.

But such is the almost magical power of money that the most obviously crooked characters are immune to any fear of being held to account. There are kleptocracies in many states, states where the ruling elites and their nearest and dearest use the state's funds as their own piggy-banks - much as the US-Italian Mafia used their protection rackets to fund their own lavish lifestyles, much as Donald Trump used his casinos as his own piggy-banks - how else could these casinos have gone broke? His - and others' - golf-clubs, casinos and hotels have been a useful conduit of money-laundering for Russian - and other - kleptocrats.

Here it is that the shape-shifting nature of money is most useful. But that characteristic of money can be found throughout the system, wherever money is changed, whether through everyday purchases and trade, or in exchanging one currency for another when travelling, or in financial speculation as in City trading on the currency exchanges or in the unregulated 'crypto' currencies like Bitcoin. Just as engines rely on oil or diesel for lubrication, so capitalism's manifold exchanges require money in its flexible and accommodating role as a medium of exchange, as the universal equivalent, as well as a store of value, to keep all trade and exchange transactions going.

But there is a social price to pay, as Shakespeare noted in the tale of Timon. Gold can and often does corrupt, it can be used for bribery and to pay for murder and other crimes, and it can be used to corrupt once honest officials, and to buy privilege.

The 'black market'

In black market conditions, you can see most obviously the danger from the corrupting power of money. For instance, in post-war 1940s Vienna, where there were shortages of all sorts especially of the new wonder-drug, penicillin, spivs took advantage of this and developed a racket, selling it to hospitals, diluted. As spivs lined their pockets, their profits came from this dilution - but the patients suffered horribly from this cynical self-serving racket. (This nice little tale was the gist of the plot of the 1949 film, THE THIRD MAN.) In Marx's London, it was common for the 'milk' you bought to be actually just water, whitened with powdered chalk: not much use if TB patients needed a better diet, or for young children in need of calcium.

In Afghanistan, one enterprising British racketeer was cynically selling useless gadgets as life-saving 'mine detectors' - and this con cost lives.

But whatever the rights or wrongs of it, as the Roman saying has it, "money has no smell" ("Pecunia non olet"). However foul its past, money conceals its dodgy past. The lucrative trade in concealing the criminal looting by Russian and other kleptocrats is vastly profitable for Western banks, estate agents, luxury trades, and lawyers. Plus, parasites of all sorts, and politicians too, all happily lining their pockets - "Enrichissez-vous!".

Once duly 'laundered', like the Mafia money in the past, money - however ill-gotten - becomes respectable and moves in the very best circles where no-one questions its legitimacy One of Putin's people has recently been made a member of the House of Lords, an unelected law-maker. Leading Western politicians are only too happy to hobnob with these shady characters, just so long as their super-yachts offer enough luxury and creature comforts for enjoyable and lucrative networking. No wonder there are always plenty of would-be parliamentary candidates whenever there's a vacancy! And no wonder so few MPs actually show up in the Commons, even by speaking on-line from home: the fact is for many of them politics is actually only a side-line, as their main business is making money, on the side.

In the 19th C, many novelists wrote of money matters. The awesome power, economic and political, of money is found in the ever-popular works of Jane Austen, whose characters' lives and loves are so often tied up in their financial situation and fortunes. Such fortunes dictate whether they can marry, just as money is the driving ambition of Thackeray's fortune-hunter, Becky Sharp, in VANITY FAIR.

This awesome power is now more blatant than ever. There is nothing in capitalism which cannot be bought, as Shakespeare saw. In today's world too, gold is still possessed of near-magical powers. And Marx in his notes on this, wrote of "the divine power" of money:

It is the visible deity, the transformation of all human and natural qualities into their opposite, the universal confusion and inversion of things; it brings incompatibles into fraternity. It is the universal whore, the universal pander between man and nature...
What I as a man am unable to do ... is made possible for me by means of money.


Now we see in the looming tragedy of climate change how this corrupting power has been utterly destructive, of humanity's relationship to the natural environment as well as of our relationships with one another. The power of money is destructive of our very nature as creatures of Mother Nature, and of our natural sociability - our social ability to cooperate and trust each other. Such is the corroding power of capitalism's indispensable sine qua non, its medium of exchange and store of value. It cannot act honestly: it can only corrupt and distort.

So long as the capitalist system of greedy, competitive production for profit lasts, this cash nexus intrudes into even our most sensitive relationships, dominating and distorting our lives, till we seem to be mere pawns in the game, controlled by 'their' greed. But as Socialists we know we have a choice - not between competing politicians and would-be leaders but the choice to change the rules of the game and to say emphatically "Money Must Go!"

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