How the capitalists measure their wealth

Publicly traded corporations are obliged to issue two types of financial reports: income statements and balance sheets. The income statement more or less honestly—and sometimes not so honestly—measures the mass and rate of profit. The balance sheet attempts—again more or less honestly or not so honestly—to measure the wealth of the corporation as a whole.

The balance sheet will actually list the material elements of the wealth of the corporation in use value terms, though often the details are quite skimpy. Each listed material element of wealth is, however, assigned a monetary value. We may see a factory employing thousands of workers busy night and day producing automobiles, clothes, iPads, medicines and so forth, but the men—and nowadays a few women—who run the corporations see a definite sum of money, measured in terms of dollars, euros, yen or yuan as the case may be.

Whether it is a worker at work—variable capital—or a machine, or a stock of yet to be sold finished goods—commodity capital—each material element of wealth is valued by capitalists and their accountants in terms of a definite quantity of money.

While a typical industrial capitalist—or corporate officer—will have trouble defining exactly what money is if you try to pin him or her down, he or she does know that money is infinitely divisible and that a given unit of money—for example, a U.S. dollar, is equivalent to another U.S. dollar. Therefore, unlike the use values that make up material wealth that differ qualitatively from one another, money is made up of some sort of uniform substance. Different quantities of money are qualitatively identical and differ only in quantitative terms.

Our industrial capitalist—especially nowadays—is also aware that the same thing is true across currency units. At any given point in time, assuming that a euro is worth say $1.30, a euro represents the same exact quantity of wealth measured in terms of money as one U.S. dollar and 30 cents. Behind dollars, euros, yuan, and yen there is hiding the common substance called money. Every active capitalist knows—or if he or she doesn’t they won’t remain a capitalist for very long—that this money substance must be increased as much as possible at the pain of ruin.

At the end of the day, the corporations—and non-corporate capitalists as well—will commit any crime—even risk life on earth itself (2)—to increase this all-important substance called money, which represents social wealth in general but not wealth in the form of specific means of production or means of personal consumption.

Only a portion of the total capital is money capital

It is sometimes claimed that the capitalists’ aim is to increase the quantity of money capital—that is, capital existing in the form of money. This, however, is not true. While a certain portion of the wealth of capitalist society must exist in the form of money—for example, dollar, euro, yuan, yen and so forth bills you carry in your wallet—the vast bulk of the wealth in capitalist society most certainly does not exist in the form of money.

The aim of capitalist production is not to maximize the quantity of money itself—this is where a capitalist differs from a miser—but to increase the quantity of wealth measured in terms of money. Most of the “money” here is actually imaginary money or what Marx called money of account.

Kliman is a Marxist who unlike the “neo-Ricardians” upholds the law of labor value. He like all Marxists who accept in some form the Marxist theory of value knows that behind this mysterious substance called money there lies a social substance called value. Money, virtually all Marxists who concern themselves with questions of economic theory would agree, represents value.

But what is the actual relationship between wealth measured in terms of money—dollars and cents—and value measured in terms of abstract human labor? Here things can get tricky.