Example research essay topic: Marx Theory Of Money - 1,273 words

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The Theory of Money and the Theory of Value The most important point to emerge from Marx's theory of money is the idea that money is a form of value. The difficulty with this idea is that we are more familiar with money itself than with value in other forms. But value does appear in forms other than money. For example, the balance sheet of a capitalist firm estimates the value of goods in process and of fixed capital which has not yet been depreciated, as well as the value of inventories of finished commodities awaiting sale. Each of these aggregations of commodities has a value, usually expressed as the equivalent of a certain amount of money, but it is clear that neither goods in process nor fixed capital is money.

Marx views the value of commodities in this sense as analytically prior to money; money can be explained according to Marx only on the basis of an understanding of the value of commodities. Marx follows Smith in regarding value as the property of exchangeability of commodities. In a society where exchange is common, products come to have a dual character as use values and as values. They have two powers: first, to satisfy particular human needs and wants; and second, to exchange for other products. This second power can be thought of quantitatively, as an amount of exchangeability or command over other commodities. The classical economists viewed value as a real, though socially determined, entity, with its own laws of conservation and motion.

Value in this sense bears the same relation to commodities as mass bears to physical objects. It is not surprising that in societies where exchange is widespread value takes on an independent form as money, as an expression of general exchangeability. Value is a central social reality for people; they constantly think and talk about it directly or indirectly; they want some way to transfer it directly among themselves, separate from particular commodities. This is, I think, what we mean by "money. " It is the social expression of value separated from the concrete particularity of any use value. With this emergence of money as the social expression of value, money stands, in opposition to commodities, as the abstract always stands in opposition to the particular. We will see value in two forms: as particular commodities, and as money.

It is crucial to recognize that this development is latent in the commodity form itself. Insofar as commodity relations are well developed, so that exchange of products is common and people are forced willy nilly to consider the value of products separately from their use values, the money form of value will also be present. There is no reason to think of the commodity form emerging historically before the money form. To the degree that we see the first, we will see the second, or reasons why the emergence of money is suppressed in the concrete situation. What we see historically are very different stages of development of commodity relations, corresponding to different degrees of development of social production and to different forms of money. These differences in levels of development may give the illusion of an historical emergence of money separate from, and subsequent to, the emergence of commodities.

But in such cases what is at issue is the particular form of money, or the way in which value manifests itself in the particular society. Even transactions which are apparently barter transactions, in that the equivalents exchanged are both concrete commodities, may best be analyzed as degenerate monetary transactions, in which the parties estimate the abstract value of their respective products, and finding them equal, or nearly equal, are able to avoid transferring money itself. Marx regards value, the general power of exchangeability that resides in commodities, as an expression of the labor expended in the production of the commodities. If we use the word "labor" for the more accurate phrase, "abstract, socially necessary, simple labor, " this theory suggests that the value in aggregate collections of commodities is proportional to the quantity of labor expended in their production. (1) This proportion is very important to the theory of money, because it implies that each unit of money value can be regarded as expressing a certain amount of labor time. In this paper I call this ratio the "value of money, " the amount of social labor time expressed on average by a unit of money. (This idea should not be confused with the concept of the "value of the money commodity", which is the labor time embodied in a unit of a particular commodity that may be functioning as money. ) The value of money is not the inverse of the wage rate in a capitalist system of production; it is the ratio of the total labor time expended to the total value added in the commodities produced. The average wage rate is the ratio of aggregate wages, which are only a part of the value added, to the total labor time.

Because money comes to stand in opposition to particular commodities, we can conceive of a difference between value and price. Price is the amount of money that a commodity commands in a particular situation. Value is the amount of labor time embodied in a particular commodity. There are numerous reasons why, in any given exchange, a commodity might exchange for an amount of money representing either a larger or smaller amount of labor time than is actually embodied in the commodity. One of the parties to the exchange may have an advantage over the other in possessing better information or facing little competition; an absolute shortage or glut of the commodity being exchanged, and so on. In such circumstances, if we maintain the concept of value separate from price, we would say that the exchange was unequal in terms of the values changing hands.

One agent winds up with more value than he or she started with, the other with less. The integrity of the idea of value, however, requires us to think of exchange as a process which conserves value. This means that although one trader may gain and another lose in exchange, no value is either created or destroyed. The sum of the values they begin with is the same as the sum they end up with; what one gains the other loses.

This law of the conservation of value is of the utmost importance in grasping Marx's use of the theory of value in analyzing capitalist production. When we apply the idea of value separate from price to transactions involving money, the concept of the value of money, the ratio of total labor time to total value added, plays a central role. Only with this convention for defining the value of money will we be able consistently to maintain the ideas that money is a form of value; that value is conserved in exchange; and that the expenditure of labor creates value (Foley 1982, pp. 37 - 47). These understandings have powerful consequences for our conception of the labor theory of value. They imply that the value referred to by the labor theory of value is ordinary money value which we use to buy and sell commodities, and which is accounted for in the balance sheets and income statements of capitalist firms.

In the aggregate, for the total system of production (which of course exists only as an asymptotic abstract notion), these balance sheets and income statements exactly measure value in the sense of the labor theory of value. For any particular capital or group of capitals (a firm, sector, industry, or na...

Research essay sample on Marx Theory Of Money