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... kingly, "Suppose moreover, six hours of average labour to be also realized in a quantity of gold equal to 3 s... " (Marx 1968, p. 211). To speak this way, Marx must have a conception of the value of money as the ratio of labor time to value added that permits him to translate labor time into monetary units. When he makes remarks like the second one he goes further and identifies this value of money with the labor time embodied in a certain quantity of gold. One result of Marx's adoption of the general equivalent theory, then, is that the value of money plays no central role in his analysis of the dynamics of capitalist production.
It is a necessary link in the expression of the relations of capitalist production in terms of money, but it itself is viewed as un problematically determined by production conditions in the gold mining industry. Thus the value of money never becomes the center of Marx's critical attention. Two Revisions of Marx's Theory of Money I would like to suggest two possible revisions of Marx's theory of money. They both maintain what I think is the core of that theory, the idea that money is a form of value.
We could, as a first line of thought, argue that Marx failed to analyze systematically a contradiction inherent in his system. There are two determinations of the value of money in Marx The first shows money in its aspect as the expression of abstract labor. In this determination the value of money is the amount of abstract labor time represented by a unit of money: so many hours of labor per dollar, for instance. As we have seen, we can measure this value of money by dividing the value added in the system in money terms into the labor time expended. But there is a second notion of the value of money as the value (or price of production) of the money commodity. It is because the money commodity is itself a value, Marx argues, that it can perform the function of measuring the value of other commodities.
How can these two conceptions of the value of money be reconciled? What social institutions mediate between them? Marx's discussion of this issue in the second chapter of the Contribution suggests that the value of money depends ultimately on the conditions of exchange between gold and other commodities at the point of production of gold. Thus arbitrage, minting, and melting of gold coin for export seem to be the mechanisms Marx has in mind for maintaining the relation between the value of the money commodity and the value of money.
It is important to recognize that this arbitrage is costly, and works only up to a point in any commodity- producing society; there is always some margin within which the value of money can vary in relation to the value of the money commodity. Thus there is always some further question as to the exact determination of the value of money. We could revise Marx's theory by arguing that what has happened in the twentieth century is that the links between money in different countries and between money and gold have become looser and looser, so that the space within which the value of money can move before it is called to order by the value of gold is very large. To carry out this theoretical development one would have to examine systematically the processes through which the values of currencies were in fact regulated under the gold standard, so that the mediations which Marx leaves somewhat vague would become clear. Then one would have to show in what specific ways these links still exist, though in attenuated form, and how they express themselves in the real motion of the system, through pressure on state policy, through the market, or by other means.
I am tempted as well by another path, which is more radical in its approach to Marx's theory. If we think of money as a form of value, the fundamental contradiction in the theory of money is the difficulty people have in actually transferring and holding something as abstract as value itself. What agents want, once value is well established as a social phenomenon, is value itself, but how can they get it? The most immediate method of transferring value would be through promises. When two agents agree on a price in a transaction, the buyer could promise the seller the of promises works perfectly well as long as agents commit through promises only value which they actually control.
At some later time the promise is cleared by another transaction in which the original buyer takes on the role of a seller. Thus it might seem that the simplest social solution to the problem of transferring value would be to posit and circulate value and through promises. There are, however, some contradictions in this method. Agents, through an excess of optimism, or later bad luck, or (though I hesitate to raise this ugly possibility) through consciously and fraudulently manipulating the system to their personal advantage, might issue promises to pay value which they cannot or will not meet. The first mediation of this contradiction would be for trading agents to use third party promises to transfer value. This has the advantage to the seller of establishing the presumption that the buyer did deliver something of value at some time to the third party or to another party.
It has further advantages if the third party has better "credit, " being in a position in which failure to meet its promises is more costly and the holder of a promise has a better chance of enforcing the promise. In this way a chain of promises of higher and higher social validation is created, which could give rise to one theory of banking. At each level of transactions the promises to pay of a third party circulate as money value. Those third parties themselves need higher level third parties to clear the payments among themselves, and so on.
What could stand at the end of this chain of promises of higher and higher social validity? One possibility, representing failure of the logic of the system, is that agents can find no acceptable way to transfer value by promises and are reduced to transferring it in the form of a concrete commodity. This is a last resort, since the whole idea of the exchange process was to move from concrete commodities to money value; accepting a concrete commodity in the end is a second best. Of course this type of failure might in reality be very common and the rules for managing it might become very well- codified, requiring that the payment be made in a particular commodity (say, gold) and regulating exactly the fineness and the standards of weight that would apply.
Gold then appears to be analytically the last step in the understanding of money, and the use of gold as payment to be a very imperfect, last- resort mediation of the problem of transferring value. Alternatively, the State might stand at the apex of the chain of promises of higher and higher social validity. State credit, rather than gold, then would be the ultimate means of payment for private transactors. This second theoretical path inverts Marx's order of argument. In Marx's conception, gold is the truly present money, and forms of credit are only substitutes (or supplements, as Jacques Derrida would say [ 1976, pp. 141 ff]), which stand in for gold and must vanish in the ultimate moment of payment. Following the second theoretical path, we would view credit as analytically the first form of money, and gold only as an ultimate mediation brought forcibly into play when exchange reaches a po...
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Research essay sample on Marx Theory Of Money
