[OPE-L:5786] commodity money

Mon, 1 Dec 1997 16:43:24 -0500 (EST)

[ show plain text ]

A few comments on recent posts:

-John E: In principle, at the level of Capital 1, any commodity can be money.
Marx mentions somewhere that 'money is not dirt but dirt can be money'.
However, convenience, etc (as Duncan has described) tends to narrow the set
of possible monies down to precious metals. This is a historical process.

-Duncan: I never intended to deny the fact that gold was the basis of the
monetary system in, say, the 19th century. What I want to stress is that
then, as now, a commodity-based monetary system is theoretically unnecessary
from a Marxian perspective (although for practical, historical or political
reasons it may be convenient to have such a system; the clearest case of
these political determinants being the restoration of the gold standard in
Britain in the late 1920s).

I agree with Duncan's picture of the way in which gold functions as the
centre of the monetary system, and the way in which it provides a peg for the
price level. My point is that it does nothing but that. We don't need gold to
give us relative prices, only to determine the absolute price level. This
formulation can accommodate different theories of (the value of) money,
including, I hope, Duncan's fascinating analysis of the role of speculation
in the determination of the value of state-issued paper money.

Now a question: In a footnote in chapter 3 of Capital 1 (Penguin Edition,
p.224, fn34) Marx mentions the use of paper money (which I presume was
inconvertible) in ancient China. How can we make sense of that, in the light
of the theory which Marx himself is presenting in the main text?

My answer is: it makes perfect sense to derive money logically the way Marx
does in Capital 1. This is a question of method. However, once you (in this
case, Marx) introduce the category of profit, you have to add a further
determination to the concept of money, specifically the function of measure
of value, which automatically cuts the link between the money commodity (that
was essential for the derivation of the category money) and the system of
prices. Once you do this, you can come back and say, look, commodity money is
not needed after all.

Perhaps this can be assimilated to the *logical* process which Marx follows
when he explains the price of uncultivated land on the basis of the LTV.
First he says labour is the basis of price, then he tells us how things that
'embody' no labour can have prices. These twists and turns are features of
Marx's method of exposition, not features of reality.