Just three more observations on the issue of commodity money, a
little late but better than never.
Wray's work has been mentioned, so has Schumpeter's (we could also
add Hicks and Iwai in Japan), to the effect that starting with money
as a commodity a) is historically incorrect and b) identifies money
with means of exchange (originating in barter). Better to start
with credit and money as unit of account (and means of
payment). Neither of these claims is persuasive, nor is the
alternative.
As far as history is concerned, the 'credit' school appear to
confuse coin with the means of exchange. We do indeed have literary
evidence in Homer, long before the invention of coinage in Ionia in
the C6th BC, of the use of money as dowry, ritual gift, and blood-
price. There are some remarkable similarities with the Anglo-Saxon
use of Wergeld and with plenty of contemporary anthropological
material. None of this shows that money arises out of exchange. What
is does show is that money prior to capitalism was basically a
phenomenon external to the core of economic reproduction. As for
coin, its rapid spread across the Greek world of the eastern
Mediterranean, whatever else it might have depended upon, was
certainly premissed on the growth of the polis and the concomitant
expansion of trade relations. Even here, however, coined money
remained an external, corrosive influence on the economy of the oikos
and slavery.
As far as identification with means of exchange is concerned,
commodity money need not lead to such an outcome. Writers who
accuse 'metallism', whatever that is, of logical fallacy, as
Schumpeter airily does (Smith was silly here ... Ricardo was foolish
there ...), do not appreciate the relationship between money and the
substance of value in Marx's work. That money has an organic relation
with exchange is not at all the same as money being primarily a
metallic means of circulation.
To start with credit is, it seems to me, to put the cart before the
horse. Credit is trust, a complex, socially specific concept. It
requires some pretty heroic leaps to show that there is some general
social nexus among exchange agents which could act as the basis
for trust. Money is such a nexus, hence Marx's monetary theory of
credit.
Costas