[This article is reprinted from Peking Review, #22, May 30, 1975, pp. 12-13.]
MONEY is a particular commodity which has been fixed as the universal equivalent of other commodities. This means money can be exchanged for all kinds of commodities. Like other commodities, it was not born with the existence of human society. It came about spontaneously in the wake of the development of commodity production and commodity exchange. Commodity exchange emerged towards the end of primitive society. People at that time did not produce for exchange, but did exchange surplus products for other things. This individual, incidental exchange of commodities took the form of exchanging goods for goods.
Following the development of commodity production and commodity exchange, exchanging goods for goods became more and more difficult. For instance, someone who had sheep wanted to exchange them for grain, but someone with grain wanted to exchange it for cloth and someone with cloth needed an axe.... To resolve this contradiction, there had to be a particular commodity which could and would be readily accepted in exchange by other people, and then this particular commodity could be exchanged for the commodity each one wanted. Gradually a particular commodity was separated from commodities to serve as the universal equivalent. This commodity was money.
Historically speaking, cattle, shells, grain, cloth, etc. all served as money materials. As the commodity economy developed further, because precious metals had the characteristics of being big in value and small in bulk, easily divisible and convenient for carrying and could be stored for a long time, they were most suitable to serve as universal equivalents. Thus precious metals like gold and silver gradually were fixed as the universal equivalent. As a medium of exchange and a means of circulation, money can be replaced by symbols of value. Paper money represents metal money, and is issued as the symbol of value and forced into circulation on the market by the state.
It is only because money is also a commodity and human labour in general is congealed in it that money becomes the universal equivalent. Money has five functions; measure of value, means of circulation, store of value, means of payment and serving as world money.
Money is the embodiment of a certain relation of production. In a society in which the exploiting classes rule, money is concentrated in the hands of the exploiting classes which turn it into a tool of exploitation. For instance, under the feudal system, feudal rulers took advantage of money by issuing it to fleece the people and amass wealth and to exploit the peasants ruthlessly through usury. Under the capitalist system, labour power becomes a commodity and money becomes capital. Under that system, the capitalists cruelly exploit the proletariat and other labouring people. Imperialist and social-imperialist countries issue paper money unchecked to create inflation and financially support their policies of expansion and aggression abroad to exploit the people at home and the people of other countries.
In capitalist society, money can buy and control everything. Because of this, those with more money are richer and have more power. In the eyes of the capitalists, money is all powerful and the goal of iiving is to make more money; in chasing after money, they can commit all kinds of criminal acts.
Because commodity production and commodity exchange still exist under the socialist system, exchange through money inevitably remains. But since the system of ownership has been changed and the issuance and management of money are in the hands of the state under the dictatorship of the proletariat, money has become a powerful tool in socialist revolution and construction.
It should be noted, however, that there are still classes, class contradictions and class struggle under the socialist system. Bourgeois right still exists as regards distribution and exchange, and ideology reflecting the commodity-money relation still exists; the idea of private ownership as reflected in the pursuit of profits and putting money in command still rots and poisons people’s minds. Money continues to be the universal equivalent and its functions are still operative. In the course of circulation, a small number of people will acquire increasing amounts of money through certain legal channels and numerous illegal ones and money can still be turned into capital and into a means of exploiting others. Therefore, bourgeois right which inevitably still exists in distribution and exchange under the socialist system must be restricted under the dictatorship of the proletariat. Only thus can we gradually dig out the soil that breeds the bourgeoisie and capitalism.
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