Abstract
Marx's contributions to monetary theory have generally been somewhat
neglected and, if they were paid any attention at all, they have been rather
severely criticized, even by Marxist economists. It should be emphasized,
however, that they are central to Marx's view of the functioning of commodity
producing (i. e., market) economies and are inextricably bound up
with his theory of value.
From Marx's analysis of the functions of money and credit and his reflections
on the rate of interest it is concluded that his adherence to the labour theory of value could not but result in his embracing the Banking School ideas, and that his theory of money shows all the weaknesses of the Banking School, plus some that are peculiar to the labour theory of value. E. g. his proposition that causality runs from prices to quantity of money in a system with full-blooded coins, but the other way round in a system with inconvertible paper money, cannot be given any satisfying micro-economic justification; nor does his theory admit of any influence of monetary policy on aggregate spending. Moreover, the labour theory of value leaves Marx without a theory of the rate of interest. His analysis of money as the "universal
equivalent" makes one wonder why he did not consider the consequences of the tansformation problem for the money commodity.
To his credit, Marx very clearly saw why Say's law of markets in the form of Say's identity is not valid in a monetary economy.
Marx's theory of money turns out to be a weak construction, because it cannot be made consistent with any acceptable assumptions about microeconomic
decision making. Blaug's dismissal of it as a mere repetition of the views of Ricarclo and Mill does not, however, do justice to Marx.
neglected and, if they were paid any attention at all, they have been rather
severely criticized, even by Marxist economists. It should be emphasized,
however, that they are central to Marx's view of the functioning of commodity
producing (i. e., market) economies and are inextricably bound up
with his theory of value.
From Marx's analysis of the functions of money and credit and his reflections
on the rate of interest it is concluded that his adherence to the labour theory of value could not but result in his embracing the Banking School ideas, and that his theory of money shows all the weaknesses of the Banking School, plus some that are peculiar to the labour theory of value. E. g. his proposition that causality runs from prices to quantity of money in a system with full-blooded coins, but the other way round in a system with inconvertible paper money, cannot be given any satisfying micro-economic justification; nor does his theory admit of any influence of monetary policy on aggregate spending. Moreover, the labour theory of value leaves Marx without a theory of the rate of interest. His analysis of money as the "universal
equivalent" makes one wonder why he did not consider the consequences of the tansformation problem for the money commodity.
To his credit, Marx very clearly saw why Say's law of markets in the form of Say's identity is not valid in a monetary economy.
Marx's theory of money turns out to be a weak construction, because it cannot be made consistent with any acceptable assumptions about microeconomic
decision making. Blaug's dismissal of it as a mere repetition of the views of Ricarclo and Mill does not, however, do justice to Marx.
Original language | English |
---|---|
Pages (from-to) | 266-287 |
Number of pages | 22 |
Journal | Kredit und Kapital |
Volume | 10 |
Issue number | 2 |
Publication status | Published - 1977 |