[OPE-L:5761] Re: Commodity Money

Duncan K. Foley (dkf2@columbia.edu)
Wed, 26 Nov 1997 16:02:33 -0500 (EST)

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In comment on Claus' "Commodity Money":

Claus gives a number of Marxological arguments tending to prove that Marx
believed that money had to be a commodity in the role of socially accepted
general equivalent. I think this is a very defendable reading of Marx.

The problem is that it leads to a dead-end for the contemporary application
of Marx's theory of money. (The Economist this week, for example, has a
piece on the demonetization of gold and the plans to sell off national gold
reserves.) This is a very frustrating and even damaging theoretical bind to
put ourselves in. As a result many writers who adhere extremely strictly to
Marx's literal words in most of their discussion seem to feel free to add
on any old theory of money that comes into their heads, or that they
perhaps remember dimly from a class on money, usually some version of the
quantity of money theory of prices. This is doubly damaging, since some of
Marx's points are explicit critiques of the quantity of money theory of
prices, and the theory itself is badly flawed and increasingly discredited
by modern econometric investigation.

But, look, a huge section of contemporary political economy debate revolves
around money, finance, and monetary policy. The argument for reining in the
growth in the U.S. is to prevent inflation, which has to do with the value
of money in terms of real goods and services. The crisis brewing up in
Southeast Asia which is prompting dark hints of crisis for the system is in
the first instance a financial crisis. If we can't organize a coherent
analysis of these issues, how far are we going to get in formulating
credible alternatives and critiques?


Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947
e-mail: dkf2@columbia.edu