[OPE-L:2403] commodity money in Marx's theory

Costas Lapavitsas (CL5@soas.ac.uk)
Wed, 29 May 1996 03:42:43 -0700

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Chai-on Lee wrote in OPE-2400:
> In the case of the prices of production,
> The money price should be defined as follows,
> P(a)/P(g)
> P(a): the price of production of commodity A
> P(g): the price of production of gold.
> Costas, you should rather have to show first why there is no reason
> at the outset why valueless money cannot do the measure of value.
> Derivative measures can do it but it should have some link to the
> original measure.

There is no reason at the outset precisely because P(g) is not a
value. If the establishment of price in an accounting sense does not
require value in the denominator when money is pure commodity, why
should it do so when money is valueless? Analogously, if the value of
the money commodity together with the value of other commodities
provide am anchor for money prices but only through a real
process of destruction of capital values etc, why couldn't this real
process also take place (transformed, to be sure) when money is
valueless? This is in broad agreement with your argument: the
performance of the measure of value function by commodity money
indicates that valueless money could also undertake this function.
How adequately is a different story but this needs to be analytically

Riccardo asked where the 'evolutionary' view of money would stand if
we started with non-commodity money.

And why should we do this? What is there to be gained by abandoning a
significant part of Marxist (and Classical) theory when this theory
actually helps us analyse non-commodity money? Is it simply the
abolition of the formal links with gold since 1971, or the
progressive diminution of the role of gold in the twentieth century?
But the theory of money as the universal equivalent is not
incompatible with the retreat of commodity money into the hoards of
central banks. Granted the operations of the financial system and the
determination of the aggregate price level are different but how is
the 'evolutionary' view a hindrance in analysing this?

I have yet to see a clear argument why commodity money is a
problematic analytical starting point for monetary theory. Marxists
have a vague sense of guilt about this while commodity-money-based
models continue to appear in neoclassical academic journals.