Appendix II: On John Gray’s Labour Money (1859)

The theory of labor time as the unity of direct measure of money was developed in a systematic manner for the first time by John Gray.

A central national bank, by the aid of its branches, would certify the time employed in the production of the different commodities. In exchange for his commodity the producer would receive an official certificate of its value—that is to say, a receipt for the labor time contained in his commodity, and these notes of a week of labor, a day of labor, an hour of labor, would represent the equivalent which the holder could receive of any other commodities which were in the stores of the bank. That is the fundamental principle which he has carefully developed in all its details, based upon existing English institutions. With this system, says Gray, “it would be as easy to sell for money as it is now to buy with money; production would be the uniform and inexhaustible source of the demand.” The precious metals would lose the “privilege” which they have over other commodities, and “would take the place which belongs to them on the market side by side with butter, eggs, cloth, and calico; and their value would interest us no more than that of diamonds.” Ought we to retain our artificial measure of value, gold, and fetter thus the productive forces of the country, or ought we not rather to make use of the natural measure of value, labor, and liberate the productive forces? Since labor time is the actual measure of value, why by the side of it should there be another, extrinsic, value? Why should exchange-value be transformed into price? Why do all commodities estimate their value in a single commodity, money, which thus becomes equal to the value of exchange?

That was the problem which Gray had to solve. Instead of solving it, he imagines that commodities can assort themselves, in direct relation with each other, as the products of social labor. But they cannot assort themselves in relation to each other otherwise than as they are. Commodities are the immediate products of individual labors, independent and isolated, which can express themselves as general social labor only by changing themselves in the process of individual exchange; labor, in the production of commodities, only becomes social labor by losing its character of individual labor. In representing the labor time contained in commodities as labor time directly social, Gray represents it as collective labor or as the labor time of individuals directly associated. In such conditions, as a matter of fact, a specific commodity, such as gold or silver, could not be for the other commodities the incarnation of labor in general, value in exchange would not become price, but neither would use-value become value in exchange, the product would not become a commodity, and thus would disappear the basis upon which bourgeois production rests. But that is not the idea of Gray. The products must be produced as commodities, but they must not be exchanged as commodities.

Gray confides to a National Bank the execution of this pious desire. On one side society, by the intermediary of the National Bank, renders the individuals independent of the conditions of individual exchange, and on the other side it leaves them to continue to produce on the basis of individual exchange. Logic compels Gray to successively deny all the conditions of bourgeois production, although he desires merely to “reform” money, the consequence of the exchange of commodities. He transforms capital into national capital, property in land, into national land, and when we look more closely into it we see that he does not receive in one hand the commodities and deliver with the other certificates for labor received, but that he regulates production itself. In his last work, “Lectures on Money,” in which Gray sets himself to present his labor-money as a purely bourgeois reform, he loses himself in still more transparent absurdities.

Every commodity is money, that is Gray’s theory, and this is the result of his incomplete and, therefore, mistaken analysis of commodities. The “organic” construction of “labor-money,” of the “national bank,” and the stores of commodities,” is only a dream in which we are enabled to get a glimpse of the dogma as a universal law. The dogma that a commodity is money, or that the labor of an individual contained in it is social labor, does not become a truth simply because a bank believes in it and acts upon it. Failure in this case plays the part of practical criticism. What Gray has not said, and what he has not imagined—that is to say, that labor-money is an alluring economic phrase for those who have a pious desire to dispense with the use of money, with the value of exchange of commodities, with the commodities of bourgeois society—has been loudly proclaimed by English Socialists who have written before and since himself.

But it was reserved for Proudhon and his school to seriously proclaim the degradation of money and the exaltation of commodities, as the principle of Socialism, and therefore to reduce Socialism to an elementary misconception of the necessary dependence which exists between commodity and money.