[OPE-L:1156] Re: Marx, Ricardo and money

Costas Lapavitsas (CL5@soas.ac.uk)
Tue, 20 Feb 1996 11:12:57 -0800

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Allin Cottrell wrote [1153]

There is no basis for saying that credit-money
> symbolizes gold (any more than it symbolizes iron or toothpaste), and it
> should be thought of as "symbolizing value" in its own right, in the sense
> that at any given point in any given economy, there is a definite (though
> historically contingent and mutable) relationship between the monetary
> unit and the amount of embodied labour-time it commands in exchange (on
> average).

I agree that credit-money does not symbolise gold (now or when gold
was actually in circulation). If, however, we assume, as Allin does
above, that credit-money directly symbolises value, what determines
the price level?

This, I take it, is behind the rest of Allin's contribution:

> In a commodity money economy one can ask not only whether
> relative prices (of commodities other than money) are "right" in terms of
> relative labour contents, but also whether _absolute_ money prices are
> "right", given the labour required to produce the money-commodity. But
> under fiat money or modern credit-money, the latter question loses its
> meaning.

If this question 'loses its meaning', do we have to go for a
determination of the price level by the Quantity of Money? Or
aggregate demand? But then, what does the labour theory of value
have to do with it? Is there any way of holding on to the critique of
the Quantity Theory, the labour theory of value, and the direct
symbolisation of value by money?

This, I feel, is a major theoretical problem for monetary theory
based on the labour theory of value.