[OPE-L:5662] Re: Commodity Money

Claus Germer (cmgermer@SOCIAIS.UFPR.BR)
Wed, 29 Oct 1997 11:15:02 -0200

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Referring to posts from Alejandro, Jerry and Mike:

I am sorry to disagree with other views, especially from Mike and
Alejandro. The following is how I see the commodity money issue: in Marx's
theory money is a commodity, for purely theoretical reasons as developped
by him, and one will not find the slightest indication of a non-commodity
form of money in Marx's writings. What this means is that in order to
assert that money does not need to be a commodity, it is necessary to
present another theory of money and of value, because in Marx's theory it
is the commodity form of money which links prices to labor time and to wage
labor. Thus, a theory of a non-commodity form of money, in the context of
the labor theory of value, would have to be able to connect prices with
labor time in a way different than Marx did. In short: in my view the
statement that money does not need to be a commodity, within the framework
of the labor theory of value, is much harder to sustain than it seems to be
assumed, because it is not enough just to assert in a few words that such a
theory is consistent with Marx's theory and quickly jump to deal with the
different aspects of contemporary paper money etc. Such a procedure implies
to assume away the real and hard problem of formulating an alternative to
Marx's theory of money.

I will make two points about Marx's theory of money as a commodity: in the
first place, the need for money to be a commodity is very clearly and
explicitly stated in the first chapter of Capital I (based on extensive
theoretical grounding developed in Grundrisse) and, in the second place,
one cannot assign Marx's theory of money as a commodity to the historical
fact that, in hist lifetime, money used to be gold and/or silver.

As to the first point, it is needless to repeat Marx's reasoning in Capital
I, ch. 1. It seems enough to remind that he defines money as the
*commodity* that becomes the general equivalent of value, as soon as gold
takes up this function. That is to say: money is theoretically a commodity
and historically it is gold. In addition, he pointed out that the
equivalent form of value, i.e. money, presents three peculiarities based on
its commodity nature, the first being that "*use value* becomes the form of
manifestation, the phenomenal form of its opposite, value"; the second is
that "concrete labour becomes the form under which its opposite, abstract
human labor, manifests itself"; and the third is that "the labor of private
individuals takes the form of its opposite, labor directly social in its
form". In short, in Marx's theory the money form of value can only be
derived from the direct exchange of commodities and thus can only be a
commodity and its contradictions derive from this form.

As to the second point, besides Marx not having been, imo, so naive as to
adopt the commodity form of money for purely historical reasons, there is
no factual support for the view that he did. Not only was paper 'money'
already known for centuries, but there was also a very long theoretical
debate between supporters of the necessary commodity form of money and the
supporters of the opposing view. Additionally, in Marx's time there were
already many practical experiences of almost purely paper 'money' systems,
the classical one being Scotland, which had already been mentioned by Smith
(Book 2. ch. 2) one hundred years earlier, and which Marx also discussed in
the Grundrisse. Smith pointed to the advantages of paper money and Ricardo
also sustained that paper money was preferable. Marx extensively analysed
the two forms in which paper 'money' existed: on the one side inconvertible
paper money issued by the State with compulsory circulation, on the other
side credit money under different forms. Both perform functions of money in
the sphere of circulation, but they merely take the place of money in the
functions of means of circulation and of payment, but do not substitute
money as the general equivalent of value. Marx explicitly opposed the
notion of a purely symbolic money, indicating that this is an illusion that
springs out of the fact that the State issues inconvertible paper money in
an apparently arbitrary way.

Claus Germer.