Some points on the discussion of Marx and commodity money - coaxed by
Jerry, the gist summarised in a paper I would have presented as EEA
had I gone (Alan has it).
I think that Marx's theory is that money is the necessarily emerging
independent form of value. The problem is then to analyse the
forms which money takes in the course of development of capitalist
exchange, and this requires that we explicitly establish the
adequacy of the particular form of money for the functions money
must perform in exchange. Specifically, valueless fiat money
can, and must, emerge in the performance of the means of exchange
function. Valueless credit money (banknotes, deposits, and so on)
can, and must, emerge in the performance of the means of payment and
hoarding functions. Commodity money, far from hindering us, shows the
path of development and the path of analysis. It also prevents us
from doing violence to the labour theory of value.
As for the measurement of value function, I think that this is indeed
a major problem, but not in the way discussed by Mike, Jerry, Fred,
and other contributors. That money needs to possess value in order to
measure value is only a first approximation to the issue. This
becomes clear when we think of capitalist exchange with pure
commodity money. Prices necessarily diverge from values, therefore,
value measurement is not the simple division of individual commodity
value by the value of money. At a further remove, the existence of a
production price for gold, and exchange at market prices rather than
prices of production, imply that for aggregate output too value
measurement is not the division of total value by the value of money.
Consequently, even when money is a commodity, value measurement
is a real process which must be analytically specified at several
different levels of abstraction. The fact that commodity money
possesses value in not immediately and obviously significant in this
respect. A fortiori, there is no reason at the outset why
valueless money cannot do the job.
Costas