Markets Without Capitalism? Reevaluating Commodity Circulation in Capital Volume I

Lately, I keep seeing people discuss whether there can exist markets without capitalism. This is often phrased in terms of Marx's terminology for commodities. The circuit of commodity circulation, C-M-C, signifies the sale of a commodity in exchange for money, which is then used to buy another commodity. The circuit of capital, M-C-M', is the process by which money makes more money: a capitalist purchases someone's labor time, and then keeps the product of that time spent working. This product, since it contains newly-exerted labor (in the abstract), is worth more than what was invested in its production. The capitalist can then sell the product for more than was spent. It is not, therefore, uncommon for market socialists to advocate for their platform using the language of Marx's critique of capital. Since C-M-C and M-C-M' are distinct circuits, and M-C-M' appears most obviously in the form of industrial wage labor, it seems that a society can be organized around C-M-C without being inflicted with M-C-M'.

This view, however, is incorrect. It does not account for how the law of value, which is the precondition for M-C-M', already operates so long as commodities are produced and exchanged. Moreover, M-C-M' can be understood not just specifically as the mechanism of wage labor, but also as the instantiation of a commodity in general. For C-M-C to exist without wage labor, then, does not mean that a non-industrial market system is one outside the regime of commodity value. Instead, the creation of new value as per M-C-M' exists in a more obscure form, as commodities are produced by petit bourgeois self-employers (i.e. those who sell the products of their own time) rather than by wage laborers.

In this blog post, I'm going to first summarize Marx's analysis of capital in Capital Volume I, chapters one to four. Then I will explain, in light of that revisitation, why I take issue with using Marx's language to advocate for some notion of markets without capital.

Revisiting the Commodity

Let us take two commodities, e.g., corn and iron. The proportions in which they are exchangeable, whatever those proportions may be, can always be represented by an equation in which a given quantity of corn is equated to some quantity of iron: e.g., 1 quarter corn = x cwt. iron. What does this equation tell us? It tells us that in two different things – in 1 quarter of corn and x cwt. of iron, there exists in equal quantities something common to both. The two things must therefore be equal to a third, which in itself is neither the one nor the other. Each of them, so far as it is exchange value, must therefore be reducible to this third.

Karl Marx, Capital 1.1: The Two Factors of a Commodity: Use-Value and Value

A commodity has two attributes: use value (the use for which it is consumed) [1] and exchange value (the quantity of money for which it is exchanged). Here we take for granted money as the unit-measure of exchange value. Money is on one hand the unit of measurement by which value, whatever that is, is expressed. Money also serves as the commodity which is socially acceptable to exchange for any other commodity under consideration. It is because there exists such a universally exchangeable commodity that all other commodities can be compared with respect to the universal equivalent one [2]. That is the social assumption made when we list prices in dollars, rather than expressing value with respect to arbitrarily different goods [3].

There is yet another underlying assumption: although money is the unit of measure we use to compare commodities in terms of their exchange-value, it is obviously not the value itself. Money is just a standard expression of different value quantities. Whether we say 20 yards of linen is equal in value to 1 coat, or that both are equal in value to $100 (you are likely not trading linen for a coat, anyway), we are really describing a ratio of values embodied by those different measurements. Otherwise, what is the basis of saying that 1 coat is worth $100?

A use value, or useful article, therefore, has value only because human labour in the abstract has been embodied or materialised in it. How, then, is the magnitude of this value to be measured? Plainly, by the quantity of the value-creating substance, the labour, contained in the article. The quantity of labour, however, is measured by its duration, and labour time in its turn finds its standard in weeks, days, and hours.

Some people might think that if the value of a commodity is determined by the quantity of labour spent on it, the more idle and unskilful the labourer, the more valuable would his commodity be, because more time would be required in its production. The labour, however, that forms the substance of value, is homogeneous human labour, expenditure of one uniform labour power. The total labour power of society, which is embodied in the sum total of the values of all commodities produced by that society, counts here as one homogeneous mass of human labour power, composed though it be of innumerable individual units. Each of these units is the same as any other, so far as it has the character of the average labour power of society, and takes effect as such; that is, so far as it requires for producing a commodity, no more time than is needed on an average, no more than is socially necessary. The labour time socially necessary is that required to produce an article under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time.

Karl Marx, Capital 1.1: The Two Factors of a Commodity: Use-Value and Value

The point of comparison to quantify value according to Marx is socially necessary labor time, the time deemed necessary in order for society to produce such a thing. It is time considered in the abstract, in terms of society’s inputs and outputs; it is not time actually spent by any one person. Here, we are also considering value only with respect to the allocation of abstract time (i.e. socially necessary labor time) by a given society. If a commodity’s price on the market changes because of monopoly price gouging or because it is a one-of-a-kind collector’s item, that is distinct from the portion of the price resulting from the item’s value as a commodity that has been produced.

Let’s keep it simple and think only about things mass produced in a competitive market: the value of a commodity is whatever its producer was expected or deemed to have invested in its production, which ultimately comes down to the social input (abstract labor time) deemed necessary in total to make the thing [4]. Other factors can be discussed for how they complicate the market price of an item compared to the social input necessary to make the item, but that is for a different discussion than this one. Besides, it helps our discussion here to assume that no one is paying more than they want, and no one is selling for less than they can afford.

The above are not points I want to argue, but presuppositions I want to import into the discussion about the role of market relations in capitalism, and whether there can exist a market of commodities outside of capitalist logic. They are, to me, the most easily understood or researchable parts of Marx’s analysis. You can read more about them elsewhere if you find them confusing, or I’ll do my best to answer any questions in the comments. What follows is what proves less easily understood for many.

Metamorphoses of Exchange

The circulation of commodities is the starting-point of capital. The production of commodities, their circulation, and that more developed form of their circulation called commerce, these form the historical ground-work from which it rises.

Karl Marx, Capital Volume 1.4: The General Formula for Capital

Again, I want to specifically argue against the notion that there exists a cycle of C-M-C exchange independently of M-C-M’. In order to understand either cycle, we need to understand their constituent metamorphoses. C-M is the exchange of a commodity for some quantity of money, and M-C is the exchange of some quantity of money for some commodity. These exchanges assume the existence of some money commodity, i.e. a commodity which exists to measure the value of other commodities with respect to its own. As discussed, this also relies upon there being some common quantifiable thing to which money and all other commodities are being compared. This is abstract labor time, or socially necessary labor time; I will refer to it as social value to avoid possible confusion from just calling it ‘value’.

C-M-C, Commodity Circulation

The change of form, C—M—C, by which the circulation of the material products of labour is brought about, requires that a given value in the shape of a commodity shall begin the process, and shall, also in the shape of a commodity, end it. The movement of the commodity is therefore a circuit. On the other hand, the form of this movement precludes a circuit from being made by the money.

Karl Marx, Capital 1.3: Money, Or the Circulation of Commodities

The cycle C-M-C illustrates the function of money as universal equivalent commodity; you can sell some commodity C1 and receive some money M in return, and then you can purchase some other commodity C2 with the money M you had acquired from your sale. Marx points out that C2 must be of equal value to C1, provided that all the money you acquired from selling C1 was spent on then acquiring C2. The function of the C-M-C cycle in total, then, is really to convert one use-value to another use-value by exchanging equal exchange-values. The example Marx gives is that if you want to give up religion for drinking, you can sell your Bible and then purchase a certain amount of beer equal in value to your Bible.

Money facilitates the two transactions by acting as an abstract measure of value; irrespective of what you use a Bible or a beer bottle for, they can be exchanged for the same amount of money. The circulation of commodities is also considered abstract because the two transactions which take place, C-M and M-C, don’t necessarily bear on each other. Whoever buys your Bible probably is not the one selling you beer; otherwise, it would be easier to make the trade directly.

What money facilitates, and what commodities accomplish, is the abstraction of such exchanges so that so long as you have money, you can enter into any other exchange for a commodity regardless of how you got that money to begin with. Acts of selling and purchasing are structurally distinct, and individual instances of one and the other do not necessarily relate to each other. You are more likely, for example, to get paid once or twice a month in exchange for working, and to then spend that money multiple times throughout the month as you buy food or pay for a place to live.

M-C-M’, Capital Circulation

The character and tendency of the process M-C-M, is therefore not due to any qualitative difference between its extremes, both being money, but solely to their quantitative difference. More money is withdrawn from circulation at the finish than was thrown into it at the start. The cotton that was bought for £100 is perhaps resold for £100 + £10 or £110. The exact form of this process is therefore M-C-M', where M' = M + D M = the original sum advanced, plus an increment. This increment or excess over the original value I call “surplus-value.” The value originally advanced, therefore, not only remains intact while in circulation, but adds to itself a surplus-value or expands itself. It is this movement that converts it into capital.

Karl Marx, Capital 1.4: The General Formula for Capital

The only use-case for money is to be exchanged for other commodities. You can’t eat money, you can’t sleep in money, you can’t drive around in money. You can certainly try those things, but you are better off spending money in order to acquire commodities which can better fulfill those desired uses. If you were to buy something and then sell it for the same amount of money, assuming a fair equivalent exchange, you still would not get anything out of it. M-C-M then might seem like a stupid idea, until you realize you can buy people’s time for it.

M-C-M’ can be understood as the central loophole to capital circulation. When you buy people’s time for them to work for you, you are buying their capability to produce value in that time. Recall that social value is socially necessary labor time, or abstract labor time. If you buy people’s time in order to produce something, and they do even just an average job, that very production in itself creates new value besides what you had invested in making the activity possible. Think about it this way: why would you invest in the production of something which is not recognized by society as creating new value, and thus sells for exactly what you had invested in its production (if not even worse)? Labor time costs money, but what is produced during that time creates new value besides what had been invested, while also containing the investment (or, rather the average investment expected by society—i.e. existing social value). Then, when you sell the produce, you receive the total value in money, including now the surplus from what new value has been generated during production.

Capitalism with a class of wage-laborers is predicted on M-C-M’ in this direct and literal sense. In Volume II, Marx expands this formula into the one below (and into others which emphasize different aspects of capital’s circulation):

M - C … (Production) … C’ - M’

Money M is spent to acquire C, which is the labor time of the wage-laborer. Then the wage-laborer spends their time producing something which is (hopefully) socially valuable, i.e. they are producing something desirable to society in a timeframe deemed by that society as average or socially necessary in order to produce the thing. A new commodity C’ is produced, and it can be sold in exchange for some money M’ which is greater than the original M invested. If M’ is not greater than M, then the venture was not socially valuable and what was produced is worth less than what was invested in it (“Why is no one buying my mud pies? I spent hours making them!”). It is production which makes new social value, insofar as society thus allocates worthwhile abstract time to the production of whatever is being made.

The relationship between the value that was invested in some production versus what surplus value was generated during that production is called exploitation. It is not a word with moral connotations here, but a word expressing what amounts to a mathematical relationship. Nevertheless, exploitation is the drive of the capitalist circuit which seeks to produce new or surplus value. The capitalist, as the mere personification of a capital, should want to see good returns on investments. The capitalist must also compete on the market to become more efficient at exploitation or else be outcompeted. It is what makes capitalism hell for most of us.

Instantiation of Commodities in General

Bourgeois society is the most developed and the most complex historic organization of production. The categories which express its relations, the comprehension of its structure, thereby also allows insights into the structure and the relations of production of all the vanished social formations out of whose ruins and elements it built itself up, whose partly still unconquered remnants are carried along within it, whose mere nuances have developed explicit significance within it, etc. Human anatomy contains a key to the anatomy of the ape.

Karl Marx, Grundrisse 1.3: The Method of Political Economy

The above discussion is all still mostly summarization of Marx’s analysis rather than anything new. The terms in which they are discussed, of exchanging labor time for wages, may give the impression that Marx is discussing an aspect of capitalism specific to industrial capitalism rather than to capitalism in general, or in the abstract. Having explained the gist of Marx’s analysis of commodity and capital circulation, I will argue that they are structural features of commodity production and exchange in general rather than for some specific forms thereof. It is this general set of economic relations which then ought to be treated as the object of Marx’s analysis, i.e. which ought to be defined as a capitalism [5]. Therefore, exploitation is a general feature of any capitalism, even if it is exploitation of one’s own labor to meet the demands of value.

The below quotation from Marx seems, for some readers, to be the basis for system of market relations (i.e. of commodity exchange) without there being circuits of capital. That is, it seems to describe cycles of C-M-C without there also being M-C-M'.

The simple circulation of commodities - selling in order to buy - is a means of carrying out a purpose unconnected with circulation, namely, the appropriation of use-values, the satisfaction of wants. The circulation of money as capital is, on the contrary, an end in itself, for the expansion of value takes place only within this constantly renewed movement. The circulation of capital has therefore no limits.

Karl Marx, Capital 1.4: The General Formula for Capital

Of course, C-M-C and M-C-M' constitute different circuits. The circuit of capital valorization (i.e. the generation of surplus value) is not the circuit of commodity circulation. One circuit represents the exchange of a commodity for money, and the subsequent exchange of that money for another commodity; it illustrates the role of money as the universal equivalent commodity which quantifies relative value between commodities and which also serves as the medium of exchange for commodities. The other circuit represents the exchange of money for one specific commodity (one's labor time), resulting in the generation of a new commodity which (containing new value) can be exchanged for more money than was invested in its production (providing that what was created was indeed valuable).

The desire for a market economy without capital, or of C-M-C without M-C-M', is a desire to participate in commodity circulation without participating in the valorization of capital (either as a worker or as a capitalist). The problem with this understanding is that it views the specific relationship of wage labor as the only context in which capital valorization exists. It understands M-C-M' as descriptive of wage labor, but not of the instantiation of commodities in general. In criticizing this view, then, we can get a better idea of how commodities are 'produced', not as individual goods or services but as containers of social value.

The first situation to consider, a ridiculous one, is an economy where commodities are only exchanged and not produced. We can treat this as our baseline case for a market without capital, and also without worrying (at first) about where the commodities being exchanged come from. The vendors approach the market with their commodities, and they begin exchanging: first for money (assume that each vendor is also a buyer), and then for another commodity (probably of a type besides that which they had sold). This exchange can go on for however long we imagine, but obviously there is a point at which possessors of commodities want to use them rather than sell them. It is at this point of consumption that the commodity exits the market. Eventually, the mass of commodities that were brought to market dwindles in number. Pure C-M-C does not describe the production of commodities; it only describes the circulation of commodities which already exist, as they are exchanged for money which is then exchanged for different commodities. Then, the path of one commodity through the market terminates when it is finally consumed. This "economy", then, is missing half the story. How are those commodities produced, and where do they get their value?

Now let's consider a situation where new commodities enter the market. There is no wage labor, i.e. there are not separate classes of people who own capital versus people who are employed by capital. This means that the people who are selling those commodities made those commodities themselves. For now, to keep it simple, let's say that no one is purchasing anything else to make those commodities. Zero money to purchase machines or ingredients is spent. However, in order for those commodities to be valuable, they cannot be easily accessible outside the market; if there was a big public orchard outside the market, and someone picked apples to sell at the market, you'd have to be really nice to not just walk outside and pick some apples yourself for free. The commodities are only valuable if their use-value is considered worthwhile for someone to produce privately and then sell to others; the only real standard we have for productivity is average time. This means someone else besides you is picking apples for an hour at their own orchard, and you buy what they have because you're not getting a better deal for apples anywhere else. If someone else is really fast at picking hours, more than anyone else, then they'll see better returns on their time. If someone is really slow, they're getting less money for the actual time they do spend. And so on and so on.

In such a situation, the law of value is still in control. Items are still being produced and brought to market. Those items, when produced, create new value that didn't exist before. If they didn't create new value, then you'd have no luck selling them; the C-M exchange is predicated on C having some value expressed in M (i.e. as exchange-value), and in this situation all you're really contributing to the value is abstract time (since you're not purchasing any resources to make the thing). If you spend money to acquire ingredients or machinery, then the truth of the matter is even more apparent. You spend some initial amount of money to invest in production, then you perform production until you have a new commodity to sell whose value must be greater than what you invested in it.

M-C-M' is at the root of commodity production, even if the initial M advanced is zero. What really matters is that a new commodity is created, that a new commodity contains new value, and that value is only created by producing something under socially worthwhile conditions (i.e. something considered to have a use-value and something into whose production which society invests abstract time). Wage labor or not, exploitation is still a fact of this little economy as people produce things under the constraints of socially-necessary labor time, and as they compete in order to increase their revenue.

The situation does not need to be a hypothetical, because it describes quite aptly the role of petit bourgeois participants in the economy. There have always been small business owners and artisans who own their own means of production; they do not employ the time of others, nor are they employed by someone to work. They sell the products of their own time. The problem is that, besides being unfeasible for everyone to pursue, the production of those things is still subject to the demands of the market; they must be made in good time, they must be deemed valuable by society (worthy of the investment of abstract labor via money), and they must be produced in competition with other firms whether fellow artisans or big corporations. They must exploit themselves in order to make a living by selling their own products on the market place. Capital logic still exists; it is only obscured because there are no distinct capitalists and workers, but only people owning their own time and selling their own products. When considering pre-industrial capitalism, with its cottage firms, we can view their relationship to production as a fetishized one. We could not understand what was really going on until capitalist production really took hold of society at large, and we realized that the basis of social value is abstract time or SNLT.

Marx, Lenin, Stalin and we know very well what a hell dance is going on as soon as exchange value appears. What did Lenin say? Where the bourgeois economists saw relationships between things, Marx discovered relationships between people! What do the three volumes of Marx’s “Capital” and the nearly 50 pages of Lenin’s work prove? Very simple. Where conventional economics sees perfect equivalence in exchange, we no longer see exchangeable things, but people in a social movement, we no longer see equivalence, but a scam. Karl Marx speaks of a spook that gives the goods this strange and at first glance incomprehensible character. Lenin, like any other Marxist, would have grabbed the cold horror at the idea of being able to produce and exchange goods while at the same time expelling their inherent devil through exorcism. Does Stalin believe that? Or does he just want to tell us that the devil is stronger than himself?

Amadeo Bordiga, Dialogue with Stalin

Amadeo Bordiga also criticized Joseph Stalin's treatment of the USSR along these lines. Stalin wrote in Economic Problems of Socialism in the USSR that the law of value was still operative in socialism, since it is really just the lower level of communism where the transition away from a capitalist economy is still ongoing. Nevertheless, Stalin characterizes the USSR's economy as having C-M-C without M-C-M'; commodity production and exchange exist, but they are not done in order to produce surplus value. In Dialogue with Stalin, Bordiga argues that the USSR is not at all working towards the abolition of the law of value, but is in fact strengthening its hold on the society thereby retaining exchange and investing even more into the production of commodities. The USSR to Bordiga was solidly capitalist. Bordiga's argument is sound; however, even the mere premise that C-M-C exists apart from M-C-M' is absurd. Bordiga implies as such when he points out that pre-capitalist commodity exchange was possible only because of slavery and forced labor [6] but, even on an abstract or structural level as discussed, the law of value exists and does not go away wherever commodities exist and are being exchanged [7]. Its hold on human activity remains persistent.


There is no C-M-C without M-C-M'; or, rather, there is no circulation of commodities without the production of commodities. What's more, the production of commodities is always-already stamped by the law of value. It is inherent to the circulation of commodities on a social scale (which is implied already by the word 'commodity'). The stated desire for C-M-C without M-C-M', that is for commodity circulation to exist without factors such as the law of value or the resultant exploitation of anyone's time to generate value, is ultimately the expression of a petit bourgeois desire to own one's time and to exchange the products thereof on the market. It does not and cannot be part of a movement to abolish value and commodities, even if it can somehow lead to the abolition of wage labor as a specific form of commodity production (which, given the industrial scale of society, is a pipe dream without the subsequent reorganization of production on a social scale). Small businesses and state-owned firms are not an escape from capital logic; they just make it more confusing to analyze directly.

For more on this topic, I am currently reading through Engels' Anti-Duhring (I'm only 22 y.o., give me time) and found that chapter III.4 about a certain vision of market socialism is very pertinent to this discussion [8]. Engels even considers such a situation where the author Duhring imagines a 'commune' that produces no new value in its commodity production. Some useful quotations from this chapter are copied in the footnote, but I'd recommend reading the whole chapter since it's very stand-alone and insightful.

[1] This definition of use-value is fine, but it should be acknowledged that in order for a commodity to be viable on the market, there must be a socially understood use-value associated with the object in order for people in general to want to buy it. Just because you want to eat a mud pie does not mean anyone else does.

[2] A commodity does not have to be a physical item, but it can also be a service done in exchange for money. The service performed then is merely the use-value which can be consumed in exchange for such-and-such exchange-value. Not the point.

[3] Marx logically derives the function of money in a way which has been confused with Adam Smith’s pseudo-historical account of barter economy. Marx here is not, however, explaining the history of how money came to be; rather he is explaining how the function of money as a universal equivalent commodity follows from the comparison of commodities’ exchange value. The role of money in this dimension is to compare such values by expressing them as what quantity of X can be exchanged for some quantity of Y. More specifically, money exists simply when quantities of {X, Y, Z, …} are expressed in terms of just one 'external' term M rather than all to each other.

[4] A capital, i.e. a circuit of capital, can be made more efficient by producing the social value expected in less actual time than considered average. However, as the market (i.e. other firms) catch up to such a speedy firm, eventually the social value decreases because the average time necessary to produce the commodity has decreased across the board.

[5] I distinguish here between “capitalism” and “a capitalism”, since the former is used to describe the predominance of capitalist relations over all other social bonds. Instead, I am considering the existence of capitalist relations in general, whether or not they are the predominant ones in some society. It could also be distinguished between production for exchange versus exchanging only surplus (unused) products, but even in the latter case are commodities valued as per usual.

[6] Even 'cottage industries', a term sometimes used now to refer to inconspicuous self-employed artisan firms, historically referred to subcontracting the manufacture of goods to homesteads prior to the widespread availability of factories and urban housing. It was predicated, very directly, on the mass production of cotton in the Antebellum South by chattel slaves (or, before that, mercantile imports from English colonies).

[7] Of course, pre-capitalist societies can be characterized by production for use where only surplus products are exchanged. However, once those products enter the market, they are necessarily valued according to that market's constraints (and to the constraints of production) as per usual.


Therefore when I say that a commodity has a particular value, I say (1) that it is a socially useful product; (2) that it has been produced by a private individual for private account, (3) that although a product of individual labour, it is nevertheless at the same time and as it were unconsciously and involuntarily, also a product of social labour and, be it noted, of a definite quantity of this labour, ascertained in a social way, through exchange; (4) I express this quantity not in labour itself, in so and so many labour-hours, but in another commodity. If therefore I say that this clock is worth as much as that piece of cloth and each of them is worth fifty marks, I say that an equal quantity of social labour is contained in the clock, the cloth and the money. I therefore assert that the social labour-time represented in them has been socially measured and found to be equal. But not directly, absolutely, as labour-time is usually measured, in labour-hours or days, etc., but in a roundabout way, through the medium of exchange, relatively. That is why I cannot express this definite quantity of labour-time in labour-hours — how many of them remains unknown to me — but also only in a roundabout way, relatively, in another commodity, which represents an equal quantity of social labourtime. The clock is worth as much as the piece of cloth.


The concept of value is the most general and therefore the most comprehensive expression of the economic conditions of commodity production. Consequently, this concept contains the germ, not only of money, but also of all the more developed forms of the production and exchange of commodities. The fact that value is the expression of the social labour contained in the privately produced products itself creates the possibility of a difference arising between this social labour and the private labour contained in these same products. If therefore a private producer continues to produce in the old way, while the social mode of production develops this difference will become palpably evident to him. The same result follows when the aggregate of private producers of a particular class of goods produces a quantity of them which exceeds the requirements of society. The fact that the value of a commodity is expressed only in terms of another commodity, and can only be realised in exchange for it, admits of the possibility that the exchange may never take place altogether, or at least may not realise the correct value.


Once the commodity-producing society has further developed the value form, which is inherent in commodities as such, to the money form, various germs still hidden in value break through to the light of day. The first and most essential effect is the generalisation of the commodity form. Money forces the commodity form even on the objects which have hitherto been produced directly for self-consumption; it drags them into exchange. Thereby the commodity form and money penetrate the internal husbandry of the communities directly associated for production; they break one tie of communion after another, and dissolve the community into a mass of private producers.

Frederich Engels, Anti-Duhring III.4: Distribution


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