Asset Speculation in Marx’s Theory of Money

Abstract

A leading problem for contemporary Marxist economics is to explain the general commodity price level in monetary systems based on state credit when the value of the national currency is not determined by its guaranteed convertibility into gold or some other external asset. The problem arises because the coherent and persuasive theory of money that Marx, following Tooke (see Arnon, 1990), developed in Capital (1867) presupposes the existence of an international commodity money system. (For the sake of brevity I will refer to this system as a ‘gold standard’ system, and abuse precise language by distinguishing between ‘gold’, that is, the money commodity, on the one hand, and ‘commodities’, that is, all other produced commodities, on the other.) On the gold standard assumption, Marx was able to outline theoretically transparent and convincing explanations for the level of commodity prices in terms of gold or national currencies defined as a given quantity of gold. But we encounter substantial problems when trying to apply this theory to a monetary system in which the values of national currencies are not fixed in terms in gold since there appears to be no relation at all between the national currency, which is the debt of the state. and commodity production.

Department of Economics, Barnard College, Columbia University, New York, NY 10027 (dfoley@barnard.Columbia.edu). I would like to thank Suzanne de Brunhoff, Andre Burgstaller, Perry Mehrling and an anonymous referee for helpful comments on earlier drafts of this chapter.