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... tion) the value flows measured in money terms may deviate from true value flows because of unequal exchanges in which value is either transferred to or drained out of the sector in question. Thus the notion of value is an operational and measurable concept if we specify the degree to which we believe unequal exchange is an important factor in the situation and the concrete circumstances that p edit the inequality of exchange. In this way the theory of money leads us to an understanding of the object of knowledge of Marx's theory of capitalism: the ordinary money values flowing through capitalist firms and measured on their balance sheets and income statements. Each of the subsidiary categories of Marx's analysis, the value of labor power, variable capital, surplus value, constant capital, and so on, has a strict and measurable correlate in the real motions of money in the capitalist economy. This is, in my view, the most important point in understanding Marx's theory of money.
Money is a form of value, in fact the only pure form of value we ever see, since every commodity exchanges under special circumstances that tend to push its price above or below its value. This aspect of the theory of money allows us to recognize Marx's theory in the reality we experience. The function of money as expressing labor time is common to all commodity- producing societies, but different arrangements perform this function in each society. The functions of money, and the theoretical problems they pose - - such as explaining the divisions of value in capitalist production, or the determinants of the value of money - - are independent of the particular monetary institutions of a society. Some clear account of these institutions is required in the analysis of any particular commodity producing system, but one account will nor serve for all such systems. Here we encounter a problem in Marx's discussion of money which needs careful criticism and rethinking.
Marx often speaks as if there were only one set of social arrangements which can perform the functions of money. This has confused theoretical debate because it conflates the problem of understanding the general functions of money as a form of value with the problem of analyzing particular forms of money. Marx's General Equivalent Theory Marx analyzes a particular form of money, the case where a commodity becomes the "general equivalent, " the common method of expressing the value of all commodities. Marx usually calls this commodity "gold" for short, though it may be any produced commodity. What is problematic in this situation is that gold is simultaneously a concrete commodity with its own conditions of production and non- monetary use value, and the expression of value separate from particular commodities. In the case of gold the universal dual nature of commodities, as use values on the one hand and value on the other, becomes even more complex.
Gold is a use- value, and a particular commodity value, but also serves as the general equivalent expression of value. This is the puzzle Marx sets himself to resolve in his discussions of the money form in the first pages of Capital, and in his Contribution to the Critique of Political Economy. How can gold simultaneously be a concrete commodity and the form of money? Marx resolves this paradox with the theory of the general equivalent commodity.
All the other commodities exclude one, (gold) from their number, forcing it to take on the role of measuring and expressing each of their values in its own quantity. It is as if one material substance, say, iron, were forced to become the universal measure of weight. This comparison of value to weight is illuminating: it shows the kind of substance the classical economists and Marx thought value to be - - an abstract property common to all objects, but never existing independently - and the puzzles that arise in trying to measure value. Like weight, value is inherently quantitative, but can be measured only by relative comparisons. The last step of the analogy, however, should alert us to a possible problem. In fact, no single substance such as iron comes to be identified with weight as such; as a matter of social convention people may use iron weights to settle disagreements about the weight of particular objects, but the idea of weight is not identified with the iron itself.
In a money commodity system, it is crucial to distinguish between the "value of money" as the labor time equivalent of the monetary unit, and the "value of the money commodity. " The latter is the amount of social labor time contained in a unit of the money commodity, say, an ounce of gold. Marx argues as if the value of the money commodity actually determines the value of money, once a society has settled on a "standard of price, " the amount of the money commodity which it will call a unit of money. For instance, the standard of price of the U. S. dollar from 1791 to 1933 was one twentieth of an ounce of gold.
If the gold exchanges for other commodities in proportion to its labor value (i. e. , there is equal exchange between gold and other commodities), then the value of money will be the value of the amount of gold contained in the standard of price. If it takes twenty hours of labor time to produce one ounce of gold, and one dollar is one twentieth of an ounce of gold, the value of money will be one hour per dollar. Gold, however, may not exchange against other commodities in proportion to their embodied labor times.
The production of gold may involve a higher or lower than average organic composition of capital, so that the equalization of the profit rate in gold production to the profit rate in other sectors requires that gold exchange for more or less than its labor value. There may be other elements of monopoly or unequal exchange in gold production. Under these circumstances the value of gold will not be equal to the value of money. It is unfortunate that the general equivalent theory suggests that the value of money is always determined by the conditions of production of the money commodity. In the development of Marxist theory the problem of the determination of the value of money separate from the value of the money commodity has not attracted much attention.
Most Marxist theorists assume that the problem of the value of money has been settled by the general equivalent theory and the idea of the standard of price. They see no substantial difference between the value of money and the value of the money commodity. From one point of view the general equivalent theory amounts to identifying the value of money in the functional sense which I described above (the ratio of labor time to value added for the system of commodity production as a whole) with the relative price of the general equivalent commodity, which is determined by its price of production relative to the prices of production of other commodities. This identification is treated by Marx as un contradictory; he devotes almost no space to a systematic discussion of possible contradictions between these two conceptions of the value of money. The value of money plays a central role in Marx's exposition of the relations of capitalist production. He begins an example by saying: "Assume the habitual working day as 12 hours, the daily value of labour- power as 3 s, the expression in money of a value that embodies 6 hours of labor... " (Marx 1967, p. 539), or, even more stri...
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Research essay sample on Marx Theory Of Money
