Marx's misology- chapter 3 Das Kapital

In chapter 3 of Das Kapital, Karl Marx wrote 

Throughout this work, I assume, for the sake of simplicity, gold as the money-commodity.

This assumption sinks the rest of the argument. The fact is money is credit and, even where gold is the sole form of legal tender, the quantity of money will be a multiple of the gold stock. But that mutliple will fluctuate depending on expectations regarding macroeconomic or geopolitical outcomes. Thus when peace and prosperity appear secure, few will want to hold gold and thus the credit creation multiplier will be high. When times are troubled, people hold higher precautionary balances of gold. Less money is in circulation. In practice, there is arbitrage to reduce volatility and there can be government or other collective action to 'smooth' things out.  

The first chief function of money is to supply commodities with the material for the expression of their values,

This is not the case. Arithmetic supplies commodities with the material- which is a number- which expresses their value. Consider the value of a pile of gold ingots compared to a different pile of gold ingots. Using Arithmetic- in particular a procedure known as 'counting'- we can say 'the value of the first pile is twice (that is two times, two being what is known as a 'number) the value of the second pile. This is because there are 12 ingots in the first pile whereas there are 6 in the second pile. There is an arithmetical operation known as 'division' which enables us to discover that 12 is twice as big as 6.'

Thus we may say 'here are 12 gold ingots- i.e. units of the money commodity- and here are 6 sheep- i.e. units of the mutton commodity. If there is a market clearing price such that each and every sheep gets sold for two gold ingots and there is no excess demand for sheep, then the price of sheep is two gold ingots or, equally, the price of two gold ingots is one sheep. 

Marx had a PhD in Law and thus did not know about Arithmetic. He thought people said 'the value of the sheep is gold because gold is money and money, indeed, is value.' This was not the case. They said 'I don't need more gold at the moment. I need a sheep which I can kill and eat. This is because I'm hungry. At the market, I gladly part with two gold ingots in order to get a sheep. The sheep has more value to me than the two ingots I paid for it.' This is the notion of 'consumer surplus' i.e. the benefit you feel you receive from being able to buy at a particular price. Suppose you can't go to market and ask me to go instead. I demand one gold ingot for myself in return for my trouble. If the value to you of a sheep is four ingots, you may grumblingly comply. But if you only valued having a sheep at two and half ingots, you would refuse.

A commodity is something which is treated as homogenous- e.g. sheep above a certain weight being treated as identical- and thus the fact that commodities exist means that Arithmetic can be used to represent commodity transactions

Marx didn't get this. He thought that nobody would be able to count sheep and say 'this herd of sheep is twice as valuable as that herd of sheep because the number of sheep in this herd is twice as great as the number in that herd'. 

Marx says money is needed 

to represent their (values as magnitudes of the same denomination,

sheep are a denomination. Six sheep are half as many as twelve sheep 

qualitatively equal, and quantitatively comparable.

This is what happens when, for a particular purpose, things like sheep or gold ingots are treated as homogeneous. You may say 'but this gold ingot belonged to my Granny. It is more valuable than other ingots'. The goldsmith won't pay you more for it. He may say 'keep that ingot because it has sentimental value for you. But it has none for me. I can only offer you the going rate.' Similarly, the fact that you love this sheep but not that sheep does not make them different from the point of view of the butcher.  

It thus serves as a universal measure of value. And only by virtue of this function does gold, the equivalent commodity par excellence, become money.

Gold is a commodity just like sheep or cigarettes. That is why sheep and cigarettes have sometimes been used as money when gold has not. This is because of Gresham's law. 'Bad money drives out good'. People bury their gold during bad times but may still use sheep or cigarettes as a medium of exchange. 

What has made gold legal tender- i.e. something which must be accepted in settlement of debts or for the payment of taxes- is the willingness of Mints to buy gold and turn it into coins or ingots or whatever and charge 'seigniorage' for this useful service. 

If paper money is made legal tender, seigniorage is greater because paper is cheap. Gold isn't.  

It is not money that renders commodities commensurable.

It is their utility. Sheep are commensurable from the point of view of the butcher or the wool merchant. This is what creates a market for sheep. But the same is true of gold or cigarettes or bearer bonds or dollar bills or anything else which has been used as a medium of exchange 

Just the contrary. It is because all commodities, as values, are realised human labour,

Nonsense! Cowrie shells were used as money in parts of the British Empire. They weren't 'realised human labour' at all. Anyway, if there is a money commodity, then the 'realised human labour' involved is that of guys named Lord Rothschild or Lord Baring. Marx truly was as stupid as shit. He had taken over a Ricardian Labour theory of value whose Olympian summit was occupied by the Banker and the Arbitrageur. Still, this created the mirage that Socialist bureaucrats could enjoy a like facility if they took over the allocative role of the money-mavens under the tyranny of a 'dictatorship of the proletariat' where the worker would be released from the burden of buying nice stuff in the market. Instead they could queue up for hours for rotten turnips- if they were lucky.  

and therefore commensurable, that their values can be measured by one and the same special commodity, and the latter be converted into the common measure of their values, i.e., into money.

This can be done using any commodity 'numeraire'. Instead of expressing prices in dollars one could express them in terms of sheep or cigarettes or gold or salt. Come to think of it, the word salary comes from the word salt. Apparently Roman soldiers were paid in salt- a relatively high value to weight commodity at that time.  

Money as a measure of value, is the phenomenal form that must of necessity be assumed by that measure of value which is immanent in commodities, labour-time. 

Money is a thing and any thing can be money. The measure of things is given in terms of numbers. For open market transactions, there is only one dimension to be considered- that of utility- and thus Arithmetic suffices. In a multi-dimensional decision spaces, arithmetic isn't enough. Around the time Marx was writing this, Hermann Grassmann, was developing the theory of what we call linear algebra, vector spaces, and what would become algebraic topology.  

The expression of the value of a commodity in gold — x commodity A = y money-commodity — is its money-form or price.

But, it is equally the case that the value of gold is its price in terms of sheep or cigarettes or time spent offering sexual services. Thus, though nothing could put a price upon my affection, I am prepared to let Beyonce use my body to slake her lust for £24.35 which is the cost of a delivery of three 15 inch Pizzas to my address. Seriously, that's a pretty good deal given the price of high-end Supermarket pizza. Sadly, Beyonce might not think so. 

A single equation, such as 1 ton of iron = 2 ounces of gold, now suffices to express the value of the iron in a socially valid manner.

No. That equation is useless unless demand and supply for gold is perfectly elastic- in other words the quantity of iron or gold that is traded can increase without changing relative prices. But that isn't how the world works. Demand for iron is 'derived' and depends on the price and quantity traded of all other relevant commodities. Consider the following- I am willing to increase pig iron production if demand for steel holds up (otherwise I will face lower prices) and if my cost of production does not rise. But this means I have to look at the price of all sorts of things- coal for electricity, shipping costs, even the price of food which greatly affects my lowest paid employees. 

Marx lived in London- a very big city with lots of arbitrageurs and relatively low shipping costs. That's why he lived in a fool's paradise of 'magically' stable prices. 

There is no longer any need for this equation to figure as a link in the chain of equations that express the values of all other commodities, because the equivalent commodity, gold, now has the character of money.

This is not true. Equations are mathematical. The price of any one commodity is not determined in isolation from any other. Rather all equations are solved simultaneously- this is the Walrasian tatonnement which is supposed to yield Arrow/Debreu general equilibrium- though that solution is inaccessible (not effectively computable) and thus though some markets clear on a daily basis, overall there is disequilibrium which, if expectations match outcomes, generates the volatility (statistical 'noise') which gives arbitrageurs their living. In other words, guys with money buy and sell on a daily basis and this smooths out prices. Such arbitrageurs are 'market makers'. 

Marx thought markets exist by magic and prices arise by magic and they are 'robust' or 'smoothed' by magic. What was the source of that magic? Labour. Why? Well Hegel had written some stupid shite to prove that Prussia was very nice (he was a Prussian Professor and thus a 'Beamte' or Civil servant of the Prussian King whose ass he needed to kiss) and TRUE freedom means OBEYING ORDERS- i.e. doing what you are told to do. Guess who has to do what they are told to do? Labourers. This proves some stupid shit which involves getting drunk and writing nonsense like the following-  

The general form of relative value has resumed its original shape of simple or isolated relative value.

No it hasn't. That's why, if you buy gold today and put it in your vault you are likely to find its price has gone down within a couple of years time- assuming Trump turns things round swiftly. Nothing is isolated from anything else- not the price of gold nor the purchasing power of a dollar or how much iron you could get by selling your herd of sheep. 

Suppose magic exists and saying 'Alakazam! I want a pizza' causes a pizza to come to you. Now suppose there is a place where you say these words and you are given a pizza because the owner of the pizza joint has been paid in advance to provide you with a pizza. Does the fact that you receive a pizza when you say 'Alakazam! I want a pizza' prove that magic works at that particular place but not elsewhere? No. The reason you keep getting pizza when you say 'Alakazam!' is because of other things which have happened or which are expected to happen- viz. the Pizza guy getting paid by some third party. 

Marx's mistake is of this childish sort. He does not get that there is a complicated 'general equilibrium' which causes the Pizzeria to appear a timeless feature of reality, rather than an evanescent phenomenon of a globalised market. In a couple of years time the Pizzerias I see on my high street may be replaced in the same manner that the fish and chip shops of my youth were replaced. The reason may have to do with the depletion of distant cod fisheries or weather conditions for Argentinian wheat or considerations more arcane yet. 

But Marx, drinking his beer and reading musty old books at the library, was a happy camper living in the magical world of a very young child. 

On the other hand, the expanded expression of relative value, the endless series of equations, has now become the form peculiar to the relative value of the money-commodity.

No. Any commodity, or bundle of commodities, may be used as the numeraire or 'unit of account'. It is important for entrepreneurs, but also house-wives, to keep track of different types of inflation- e.g. that which affects consumers as distinct from particular classes of producers- so as to avoid going bankrupt or ending up (in Victorian times) in the workhouse. 

Sadly, the underlying mathematics is intractable. The solution for the general equilibrium problem would be in exponential time- i.e. the Universe would have ended before we could compute it even if there were no problems of concurrency and impredicativity. Speaking generally, even then, solutions would not be unique. 

The series itself, too, is now given,

it is inaccessible if not unknowable. Yet, it can serve a coordinating function because people can form expectations regarding what direction things are moving in and how quickly or slowly things are likely to change.  

and has social recognition in the prices of actual commodities.

Mrs. Marx was always recognising the prices of commodities she met at social gatherings. What Marx didn't realise was that the existing price matrix depends on futures markets. That's where you get weird stuff like 'contango'. In other words, Marx's cozy Victorian fairy tale world of magically clearing markets was actually founded upon the mystic chrematistics of Keynesian expectations or rational expectation. It was there- not in a 'general glut' arising because workers had no money to buy stuff while the miserly bourgeoisie refused to spend a penny- that the alchemy of boom and bust- of shares becoming 'gilt edged' or sinking like lead- actually occurred. 

I suppose if Marx and Engels had been smart, they could have studied this and become as rich as Ricardo and, through their own lived experience, understood the mysteries of Capital. Instead they thought it was some stupid shit about getting your workers to work longer hours for the same pay. 

We have only to read the quotations of a price-list backwards, to find the magnitude of the value of money expressed in all sorts of commodities.

We'd have to know the quantity traded. 

But money itself has no price.

This stupid cunt just said he would take gold to be money. Gold has a price. How fucking drunk was Marx when he wrote this shite?  

In order to put it on an equal footing with all other commodities in this respect, we should be obliged to equate it to itself as its own equivalent.

Sheep are their own equivalent as are ciggies and gold ingots and so forth.  

What if we have paper currency? Well, by Gresham's law, bad money drives out good. In other words, gold and silver are hoarded and people transact in paper currency. Its velocity of circulation goes up. There is inflation. Its price- i.e. the basket of goods it commands- falls. Of course, this outcome can be averted if the monetary authority ensures that the money stock does not grow faster than the economy.

The price or money-form of commodities is, 

merely a matter of convention. Anything at all can be the numeraire.  

like their form of value generally, a form quite distinct from their palpable bodily form;

sheep have a form. The price of mutton does not. The thing is merely a number which can go up or down.

it is, therefore, a purely ideal or mental form.

just like 'mutton' or the number ten. But these aren't 'purely ideal' or 'mental'. There is empirical verification. If I say 'I have ten gold ingots in the safe', the auditor can show I am lying. But if I say 'I understand the transcendental implications of a truly Marxian Grammatology of the sign that is 'value' I am talking bollocks- i.e. babbling about 'purely ideal' or 'mental' nonsense. 

Although invisible, the value of iron, linen and corn has actual existence in these very articles:

No. The utility is in those articles which is why people buy them. But value is not utility. Air has utility. But, because it isn't scarce, it has no price- which is what Marx says is its value.  

it is ideally made perceptible by their equality with gold, a relation that, so to say, exists only in their own heads.

It doesn't exist at all. The fact that an exchange is made does not mean that exchange is equal. That's why there is a need for arbitrageurs- i.e. people who will buy when prices are low because they hope to sell when prices recover.  

Their owner must, therefore, lend them his tongue, or hang a ticket on them, before their prices can be communicated to the outside world.

No. The owner approaches brokers who quote him a buy/sell price (the spread being their commission). Either they do a deal or withdraw from the market. This is how markets 'clear'.  

Since the expression of the value of commodities in gold is a merely ideal act,

It is merely an act just like the expression of the value of Marx's work by means of a vigorous fart. There is nothing 'ideal' about it.  

we may use for this purpose imaginary or ideal money.

Suck my imaginary dick! 

Every trader knows, that he is far from having turned his goods into money, when he has expressed their value in a price or in imaginary money, and that it does not require the least bit of real gold, to estimate in that metal millions of pounds’ worth of goods.

Assuming the trader supplies or demands only a small portion of the total, he is a price taker. What Marx is describing is a drunken fool dreaming of mountains of gold.  

When, therefore, money serves as a measure of value, it is employed only as imaginary or ideal money.

Anything at all serves as a 'measure of value'. An alcoholic may think of his wage as translating into x numbers of bottles of hooch. Sadly, this may mean that when the price of hooch goes up, he has less to spend on healthy stuff and ends up drinking more hooch- perhaps by getting a job with a hooch maker. In this case, what is happening is an 'income effect' of a relative price change. Marx can't be blamed for not knowing about it. But Slutsky, a Marxist who formalised this notion over a century ago, should not be ignored by contemporary Leftists. If you are a Marxist, why not update his theory the way Anwar Sheikh has done? Why turn his misology into a mantra for virtue signalling, or purely theological, purposes?

 This same phenomenon. as Slutsky would soon see, is associated with what the Soviets would call 'the scissors crisis'. In a country with a traditional agricultural sector, if the price or availability of manufactured goods goes up, the rural folk may decide to revert to subsistence. They substitute inferior homespun for mill cloth. But as linkages in the economy collapse, so does its ability to defend or administer itself. What follows can be a complete collapse of the urban economy. Drunken hooligans may invade the mansions of the rich. They may wipe their arse on Gobelin tapestries. Those who have gold have their throats slit. The beggar may escape with his life. The Baron may be fed to the dogs. 

This circumstance has given rise to the wildest theories.

But nobody's was stupider than Marx. Fuck was he drinking?  

But, although the money that performs the functions of a measure of value is only ideal money,

Nope. There are people called 'auditors' who turn up and find out whether stock is 'fungible'- i.e. can be sold immediately. This is called 'marking to market' and has to do with actual not ideal money or imaginary money. 

Marx fondly believed that nobody in the City would lift an eyebrow if an entrepreneur said- 'I have a billion pounds worth of stock. This is because each pair of my dirty underwear would fetch at least 20 million quid on the open market'.  

price depends entirely upon the actual substance that is money.

Nope. It depends entirely on supply and demand. Nobody cares about the 'actual substance'. Why? Transactions are netted out at the end of the day. There may be no actual transfer of the money commodity.  

The value, or in other words, the quantity of human labour contained in a ton of iron, is expressed in imagination by such a quantity of the money-commodity as contains the same amount of labour as the iron.

Nonsense! A ton of iron may sell for a high price or, if market conditions are bad, it may not be worth storing and thus is left to rust in a shuttered warehouse on which the rent has not been paid. The labour embedded in it is wholly irrelevant. 

According, therefore, as the measure of value is gold, silver, or copper, the value of the ton of iron will be expressed by very different prices, or will be represented by very different quantities of those metals respectively.

No. The thing may have value and yet there may be no market for it. It has no price. You are welcome to take it because nobody is interested in enforcing their property rights in it. Yet, it has value. Free goods- like air, or stuff you can take for free because they aren't 'scarce' (i.e. there is no effective demand for the thing at this time), still have value.  

If, therefore, two different commodities, such as gold and silver, are simultaneously measures of value, all commodities have two prices — one a gold-price, the other a silver-price.

This is bimetallism.  If both silver and gold coins circulate and their relative value does not reflect the price ratio between the two commodities, then it is likely that one will be hoarded while the other has higher velocity of circulation. Assuming workers only rarely get a gold coin, there was a 'Keynesian' argument for bimetallism. There was much debate about this at a later time. But Marx's Germany was only able to go on the gold standard after it got French reparations. Still, Marxism was valuable because it was so much more conservative than Henry Georgism or 'Keynesian' currency arguments. I put 'Keynesian' in scare quotes because Keynes was no more a Keynesian than Marx was a Marxist.

These exist quietly side by side, so long as the ratio of the value of silver to that of gold remains unchanged, say, at 15:1. Every change in their ratio disturbs the ratio which exists between the gold-prices and the silver-prices of commodities, and thus proves, by facts, that a double standard of value is inconsistent with the functions of a standard. 

Nope. We can say that the different types of coin served different purposes and this is what meant different premiums applied to them such that one type of coin wasn't being melted down.  

Commodities with definite prices

There are no such commodities. True, market-makers may be able to stabilize prices but there could be sharp discontinuities.  

present themselves under the form: a commodity A = x gold; b commodity B = z gold; c commodity C = y gold, &c., where a, b, c, represent definite quantities of the commodities A, B, C and x, z, y, definite quantities of gold.

But prices change from day to day- or would do so absent arbitrageurs. 

The values of these commodities are, therefore, changed in imagination

expectation of a type that lies at the heart of the practice of accountancy and business management.  

into so many different quantities of gold. Hence, in spite of the confusing variety of the commodities themselves, their values become magnitudes of the same denomination, gold-magnitudes.

No. Suppose Trump decides to go back on the gold standard with convertibility at the current market price. GNP would be 30 trillion. But nobody thinks this would mean that the US had half a million tons of gold. The total global stock is half that. It is obvious that the Gold backing of the dollar might be less than 1 percent. But even that would be massive overkill. Currently, the US only holds less than 10,000 tons. 

They are now capable of being compared with each other and measured,

They always were. Guys have been swapping sheep for wheat or iron or whatever for thousands of years.  

and the want becomes technically felt of comparing them with some fixed quantity of gold as a unit measure. This unit, by subsequent division into aliquot parts, becomes itself the standard or scale. Before they become money, gold, silver, and copper already possess such standard measures in their standards of weight, so that, for example, a pound weight, while serving as the unit, is, on the one hand, divisible into ounces, and, on the other, may be combined to make up hundredweights.  It is owing to this that, in all metallic currencies, the names given to the standards of money or of price were originally taken from the pre-existing names of the standards of weight.

By the time Marx wrote this, a departure from gold convertibility, such as that which had occurred during the Napoleonic wars, would probably not have been inflationary. Still, the riskless asset represented by gilts did play a great role in bringing this about.  

As measure of Value, and as standard of price, money has two entirely distinct functions to perform.

Nope. They are one and the same. It is as a 'store' of value that its function could diverge from that of being a medium of exchange. Marx truly was as stupid as shit.  

It is the measure of value inasmuch as it is the socially recognised incarnation of human labour;

No it isn't. Only demand and supply matter. There was some demand for Marxian shite. Das Kapital sold a thousand copies which wasn't bad at all.  

it is the standard of price inasmuch as it is

the price at which the market clears.  

a fixed weight of metal.

Nope. That weight may be changed but markets may decide that doesn't matter. To some extent money, as a medium of exchange, is endogenous. This was obvious to actual financiers. It wasn't obvious to stupid nutters with shitty German PhDs.  

... only in so far as it is itself a product of labour, and, therefore, potentially variable in value, can gold serve as a measure of value. 

No. This is what makes gold an inferior measure of value. A big new gold discovery would be inflationary. Equally, if gold stocks fail to keep pace with global economic growth- there will be a deflationary effect. It is better to have paper money and a monetary authority which ensures that the value of money remains stable relative to a basket of goods and services.  

It is, in the first place, quite clear that a change in the value of gold does not, in any way, affect its function as a standard of price. No matter how this value varies, the proportions between the values of different quantities of the metal remain constant. However great the fall in its value, 12 ounces of gold still have 12 times the value of 1 ounce; and in prices, the only thing considered is the relation between different quantities of gold. Since, on the other hand, no rise or fall in the value of an ounce of gold can alter its weight, no alteration can take place in the weight of its aliquot parts. Thus gold always renders the same service as an invariable standard of price, however much its value may vary.

No. Gold is like sheep or cows. The same problem arises with gold as it does with using cows as the numeraire.  

In the second place, a change in the value of gold does not interfere with its functions as a measure of value.

Yes it does. If gold suddenly becomes plentiful, its price will fall 

The change affects all commodities simultaneously, and, therefore, caeteris paribus, leaves their relative values inter se, unaltered, although those values are now expressed in higher or lower gold-prices.

In technical terms, Marx is saying Money is 'super-neutral'- i.e. the real economy unaffected by the level of the money supply but also that the rate of money supply growth has no effect on real variables. This may be the case. What can't be the case is that this happens by magic. 

The cretin Marx thinks he has discovered some philosophical reason why this magic must always obtain. 

Just as when we estimate the value of any commodity by a definite quantity of the use-value of some other commodity,

Nobody does so. When you buy a watch you don't say 'this watch is as valuable as 500 cheeseburgers'.  

so in estimating the value of the former in gold,

i.e. saying 'I guess this watch must cost at least 500 guineas. I've heard that you can't get a watch of this quality for much less than that.' Buy what actually happens is you get quotes from different vendors and thus get an idea of the going price.  

we assume nothing more than that the production of a given quantity of gold costs, at the given period, a given amount of labour.

When has this ever happened? Nobody knows how much labour went into a watch. As for gold, a lot of it was dug out of the ground many years ago. Who knows how much labour it took at that time? Probably a lot more than it does now because technology is more advanced. 

As regards the fluctuations of prices generally, they are subject to the laws of elementary relative value investigated in a former chapter.

There are no such 'laws'. The fact is the same commodity can be produced in a more or less labour intensive manner. Sometimes gold nuggets are just picked up from the river bed by passing strollers. Sometimes arduous labour is involved in digging tunnels to get at the gold reef.  

A general rise in the prices of commodities can result only, either from a rise in their values — the value of money remaining constant

Nope. If there is a rise in prices, the value of any unit of money has fallen.  

— or from a fall in the value of money,

i.e. inflation has occurred. That means prices have risen.  

the values of commodities remaining constant.

This cretin thinks value remains the same because embedded labour power remains the same. But a thing may suddenly become scarce and thus command a high price. Equally, if there is inflation- because the Government is printing too much money- the prices (and hence, by Marx's stipulation, the value) of things have risen. 

The fact is if there is dissaving- i.e. people borrow to spend, rising demand can drive up prices. This is what happens when there is a speculative asset bubble. Equally, if people become pessimistic about the future- e.g. they fear a devastating war will break out- they may decide to save money rather than spend. Lack of demand drives down the price level.  

The relationship between the stock of money and the price level is given by the equation MV=PT where V is the velocity of circulation and T is the total level of transactions. This is an accounting identity. Marx didn't understand this 

On the other hand, a general fall in prices can result only, either from a fall in the values of commodities — the value of money remaining constant —

if things get cheaper, the value of money rises. Savers win. Borrowers lose. Landlords are happy that the rents they get buys them more. Tenants are unhappy as a bigger proportion of their income goes on rent. 

or from a rise in the value of money, the values of commodities remaining constant.

This can't happen. If the value of money rises, prices have fallen. 

It therefore by no means follows, that a rise in the value of money necessarily implies a proportional fall in the prices of commodities; or that a fall in the value of money implies a proportional rise in prices.

True. The velocity of circulation could change. 

Such change of price holds good only in the case of commodities whose value remains constant.

But their relative price has increased. This means demand is likely to fall because of the 'substitution effect'.  

With those, for example, whose value rises, simultaneously with, and proportionally to, that of money, there is no alteration in price.

But demand is likely to fall. 

And if their value rise either slower or faster than that of money, the fall or rise in their prices will be determined by the difference between the change in their value and that of money; and so on.

The change in relative prices gives rise to income and substitution effects. This affects the level of Transactions. Thus both inflation or deflation brought about by monetary shocks, or bad monetary theory, have undesirable effects on the real economy. 

Let us now go back to the consideration of the price-form.

By degrees there arises a discrepancy between the current money-names of the various weights of the precious metal figuring as money, and the actual weights which those names originally represented.

D'uh! A pound sterling wasn't a pound of silver in Marx's time.  

This discrepancy is the result of historical causes, among which the chief are: — (1) The importation of foreign money into an imperfectly developed community. This happened in Rome in its early days, where gold and silver coins circulated at first as foreign commodities. The names of these foreign coins never coincide with those of the indigenous weights. (2) As wealth increases, the less precious metal is thrust out by the more precious from its place as a measure of value, copper by silver, silver by gold, however much this order of sequence may be in contradiction with poetical chronology. 

No. Bad money- i.e. the inferior currency- drives out the good money which is hoarded. When gold is deposited with Goldsmiths who have strong vaults, you start to get credit creation. In other words a small stock of gold or silver supports a large number of transactions denominated in gold or silver.  

 The word pound, for instance, was the money-name given to an actual pound weight of silver. When gold replaced silver as a measure of value, the same name was applied according to the ratio between the values of silver and gold, to perhaps 1-15th of a pound of gold. The word pound, as a money-name, thus becomes differentiated from the same word as a weight-name.  The debasing of money carried on for centuries by kings and princes to such an extent that, of the original weights of the coins, nothing in fact remained but the names. 

So what? Lots of words change their meaning over time. Marx had wasted his time in the British library. He was too stupid to understand how the economy actually worked. But then, his job was to tell stupid lies.  

These historical causes convert the separation of the money-name from the weight-name into an established habit with the community. Since the standard of money is on the one hand purely conventional, and must on the other hand find general acceptance, it is in the end regulated by law.

Mints did this. They produced coins of a fixed weight and purity. It is the notion of legal tender- i.e. what type of coin must be accepted in settlement of debts or the payment of taxes- which has salience here. If paper money is legal tender, that is what people will use wherever they can.

A given weight of one of the precious metals, an ounce of gold, for instance, becomes officially divided into aliquot parts, with legally bestowed names, such as pound, dollar, &c. These aliquot parts, which thenceforth serve as units of money, are then subdivided into other aliquot parts with legal names, such as shilling, penny, &c. But, both before and after these divisions are made, a definite weight of metal is the standard of metallic money. The sole alteration consists in the subdivision and denomination.

All this didn't matter by the time Marx was writing this. What mattered was the credit multiplier which depended on expectations. If there was a financial panic, there would be a run on the banks. This would trigger a depression. Expectations could create Reality.  

The prices, or quantities of gold, into which the values of commodities are ideally changed, are therefore now expressed in the names of coins, or in the legally valid names of the subdivisions of the gold standard. Hence, instead of saying: A quarter of wheat is worth an ounce of gold; we say, it is worth £3 17s. 10 1/2d. In this way commodities express by their prices how much they are worth, and money serves as money of account whenever it is a question of fixing the value of an article in its money-form. 

But this happened regardless of convertibility into gold. Marx was behind the times. 

The name of a thing is something distinct from the qualities of that thing. I know nothing of a man, by knowing that his name is Jacob.

I know a lot about him precisely because his name is not Jamshed or Jagdish.  

In the same way with regard to money, every trace of a value-relation disappears in the names pound, dollar, franc, ducat, &c.

No. These are the names of currency. If someone says 'that is ten pounds', I understand that the thing is something available for me to buy with the stuff in my wallet. 

The confusion caused by attributing a hidden meaning to these cabalistic signs is all the greater, because these money-names express both the values of commodities, and, at the same time, aliquot parts of the weight of the metal that is the standard of money.

There is no such confusion. We don't attribute a hidden or cabalistic meaning to Euros or dollars or Rupees or whatever.  

 On the other hand, it is absolutely necessary that value, in order that it may be distinguished from the varied bodily forms of commodities, should assume this material and unmeaning, but, at the same time, purely social form. 

Gibberish. Things in a shop have sticker prices. Things in the homes of people I visit do not. Speaking generally, stuff I see there is not for sale. It is not socially acceptable to say 'how much do you want for this chair? What about the bed? I take it your wife comes with it.'  

Price is the money-name of the labour realised in a commodity.

No. Land and animals have a price. There is no 'labour realised' in a goat or a stretch of marsh land. 

Hence the expression of the equivalence of a commodity with the sum of money constituting its price, is a tautology, 

It is nonsense. I may have bought a kitten but my cat is not equivalent to the price I paid. Chairman Miaow is my heart's delight.  

just as in general the expression of the relative value of a commodity is a statement of the equivalence of two commodities.

No. It is a price ratio. 

But although price, being the exponent of the magnitude of a commodity’s value, is the exponent of its exchange-ratio with money, it does not follow that the exponent of this exchange-ratio is necessarily the exponent of the magnitude of the commodity’s value.

Market prices are merely those at which markets clear- i.e. there is no excess supply or demand. It is likely that there is considerable consumer and producer surplus.  

Suppose two equal quantities of socially necessary labour

Nobody knows what labour is 'socially necessary'. There may be some better way of making the thing or there may be a better thing to make.  

to be respectively represented by 1 quarter of wheat and £2 (nearly 1/2 oz. of gold), £2 is the expression in money of the magnitude of the value of the quarter of wheat, or is its price.

Is this nutter talking about productivity? It takes as much labour to grow two quid worth of wheat as three quid worth of potatoes. We say labour in the wheat sector is less productive. This means that rents and profits are likely to be lower for wheat than for potatoes. At the margin, agricultural land will switch to growing potatoes. 

If now circumstances allow of this price being raised to £3, or compel it to be reduced to £1, then although £1 and £3 may be too small or too great properly to express the magnitude of the wheat’s value; nevertheless they are its prices, for they are, in the first place, the form under which its value appears, i.e., money;

Not wheat appears as wheat. It can be sold for money, but its form does not become money.  

and in the second place, the exponents of its exchange-ratio with money.

That is just the price. 

If the conditions of production, in other words, if the productive power of labour remain constant, the same amount of social labour-time must, both before and after the change in price, be expended in the reproduction of a quarter of wheat. This circumstance depends, neither on the will of the wheat producer, nor on that of the owners of other commodities.

He just means labour productivity is determined by the state of technology and available physical capital- e.g. ploughs, tractors etc. 

Magnitude of value expresses a relation of social production, it expresses the connexion that necessarily exists between a certain article and the portion of the total labour-time of society required to produce it.

No. Prices may rise or fall for exogenous reasons. They are not determined by labour productivity. In particular land or capital productivity can rise greatly. This is what has happened in affluent countries. This has permitted a much higher standard of living. Marx's theory was backward looking and thus increasingly irrelevant, or actively mischievous, for a technological age. 

As soon as magnitude of value is converted into price, the above necessary relation takes the shape of a more or less accidental exchange-ratio between a single commodity and another, the money-commodity. But this exchange-ratio may express either the real magnitude of that commodity’s value, or the quantity of gold deviating from that value, for which, according to circumstances, it may be parted with.

Marx just means that even if productivity rises, wages or prices might fall. This is because when supply increases but demand is inelastic, total revenue can fall. That's one reason the terms of trade tend to move against primary producers. 

The possibility, therefore, of quantitative incongruity between price and magnitude of value, or the deviation of the former from the latter, is inherent in the price-form itself.

It is inherent in life. I may spend a lot of time and effort doing stuff which nobody appreciates. The consequence is that my wife leaves me and I become as poor as shit.  

This is no defect, but, on the contrary, admirably adapts the price-form to a mode of production whose inherent laws impose themselves only as the mean of apparently lawless irregularities that compensate one another.

Gibberish. Elderly peasant women understand the market well enough and get a good price for the eggs they have brought for sale.  

The price-form, however, is not only compatible with the possibility of a quantitative incongruity between magnitude of value and price, i.e., between the former and its expression in money, but it may also conceal a qualitative inconsistency, so much so, that, although money is nothing but the value-form of commodities, price ceases altogether to express value.

Value, for economists, is utility. If there is no scarcity, a thing of great utility may have zero price. That does not mean clean air or beautiful natural scenery have no value.  

Objects that in themselves are no commodities, such as conscience, honour, &c., are capable of being offered for sale by their holders,

No. That is merely a manner of speaking. It is not the case that I can buy your conscience and give it to someone who lacks any such thing.  

and of thus acquiring, through their price, the form of commodities.

Nonsense! It simply isn't true that you can buy virtue from a nun and give it to your slut of a wife.  

Hence an object may have a price without having value.

It has utility for some purpose though that purpose may be unworthy or harmful. Drugs have a price though people may be better off never consuming them. 

The price in that case is imaginary, like certain quantities in mathematics.

The price of drugs is real. It is an empirical fact that people who take them gain something by doing so- e.g. reduced craving or postponement of 'withdrawal' symptoms. Similarly, complex numbers (which have an 'imaginary' component) feature in equations describing physical or chemical processes and can be empirically verified. Marx is trying to be 'mathsy' but is merely displaying his ignorance.  

On the other hand, the imaginary price-form may sometimes conceal either a direct or indirect real value-relation; for instance, the price of uncultivated land, which is without value, because no human labour has been incorporated in it.

Marx is highlighting the stupidity of the labour theory of value. Why does uncultivated land command a price? The answer is that has a potential use. Under some set of circumstances, it could be very valuable indeed. Speculators understand this. There can be a real estate 'bubble'- like the one Dickens depicts in Martin Chuzzlewit- where mosquito ridden swamp land is bought and sold for astronomical prices.  

Price, like relative value in general, expresses the value of a commodity (e.g., a ton of iron), by stating that a given quantity of the equivalent (e.g., an ounce of gold), is directly exchangeable for iron. But it by no means states the converse, that iron is directly exchangeable for gold.

It may be. But, equally, unless the price in question is 'market clearing' rather than 'administered' the ton of iron may find no takers. Indeed, it is likely that it will remain on the inventory till market conditions improve. 

In order, therefore, that a commodity may in practice act effectively as exchange-value,

there has to be effective demand for it- i.e. demand backed up by the ability to pay. Chairman Miaow is a great admirer of my books. Sadly, he can't buy them on Amazon because he has no money.  

it must quit its bodily shape, must transform itself from mere imaginary into real gold,

not 'imaginary'- 'potential'. This is a matter for auditors who check your valuation of stuff in your inventory. Consider my poetry. You can say 'I can imagine you writing good poetry because I can imagine you turning into a flying unicorn. But you don't have the potential to be a good poet because you are stupid and lack literary talent of any kind.'  

although to the commodity such transubstantiation may be more difficult than to the Hegelian “concept,”

Nonsense! A ton of iron need make no special effort to get sold at a time when the construction sector is booming.  

the transition from “necessity” to “freedom,” or to a lobster the casting of his shell,

lobsters don't find this difficult at all.  

or to Saint Jerome the putting off of the old Adam. 

By not fucking or listening to snakes. Some may find this difficult. Snakes can be very witty you know.  

Though a commodity may, side by side with its actual form (iron, for instance),

a commodity is its actual form.  

take in our imagination the form of gold,

Not our imagination. We can empirically verify whether it can be sold and how much gold this will get us.  

yet it cannot at one and the same time actually be both iron and gold.

It can only be iron. The guy who owns it can exchange it for gold- if there is effective demand for it.  

To fix its price, it suffices to equate it to gold in imagination.

No. That's not how business works. You have to empirically verify that there is effective demand for it and then see what quantity of gold you can purchase with that money. This is a case of verifying potential not dreaming of Castles in Spain or the vast piles of gold in which Scrooge McDuck likes to bathe.  

But to enable it to render to its owner the service of a universal equivalent, it must be actually replaced by gold.

No. You can raise money on your inventory.  

If the owner of the iron were to go to the owner of some other commodity offered for exchange, and were to refer him to the price of the iron as proof that it was already money,

the other guy would call say 'call your banker and see if he will release funds on that security. Actually, I'll send you to my banker. Let him take the commission on the deal. He will be grateful to me and that may come in handy when I need a bridging loan.' 

he would get the same answer as St. Peter gave in heaven to Dante, when the latter recited the creed —

“Assai bene è trascorsa
d’esta moneta già la lega e ’l peso,
ma dimmi se tu l’hai ne la tua borsa.”

( “Now this coin is well-examined, and now we know its alloy and its weight. But tell me: do you have it in your purse?” And I: “Indeed I do—so bright and round that nothing in its stamp leads me to doubt.”)

Actually, Dante's Florence had quite a sophisticated Banking system. The Banker would pop by, strike a deal, and the transaction would proceed on the basis of a handshake. Money is Credit that is Faith in the counterparty. Religion may require more than Faith. It may require Hope and Charity and not wanking while looking at dirty pictures. 

A price therefore implies both that a commodity is exchangeable for money, and also that it must be so exchanged.

A market clearing price is good enough for 'marking to market'- i.e. providing a valuation- stuff you have in your inventory. Your Banker can make a profit providing bridging finance. 

On the other hand, gold serves as an ideal measure of value,

it doesn't because of exogenous shocks. It is better to have paper money managed by a competent Central Bank.  

only because it has already, in the process of exchange, established itself as the money-commodity. Under the ideal measure of values there lurks the hard cash.

Gibberish. Prices are an empirical measure of value as used in Accountancy, Banking and Commerce in general. Hard cash does not matter. Credit does. This in turn is about Expectations. The time is not distant when people will never see 'hard cash'. It won't have to lurk around or jerk around or smirk at drunken nutters talking bollocks about Capitalism.