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Money, Power, and Capitalism: Marx’s Theory of Money and the Contemporary State-Credit Standard

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Book cover Karl Marx’s Life, Ideas, and Influences

Part of the book series: Marx, Engels, and Marxisms ((MAENMA))

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Abstract

The analytical structure of Marx’s theorization of money reflects both his materialist conception of history and the dialectical method of analysis he deployed to understand concrete phenomena. The same approach is deployed to comprehend how and why and by what means credit money (and state credit money in particular) became the basis of the modern monetary system. The chapter highlights how Marx’s ideas about money and finance, which were developed in the context of commodity money, help in comprehending the contemporary international financial system.

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Notes

  1. 1.

    The approach of this chapter is influenced by the work of Suzanne de Brunhoff and Duncan Foley, in particular: Suzanne de Brunhoff, Marx on money (New York: Urizen Books, 1976); Suzanne de Brunhoff “Marx’s Contribution to the Search for a Theory of Money,” in Marx’s theory of Money: Modern Appraisals, ed. by Fred Moseley (New York: Palgrave Macmillan, 2005); Duncan Foley and Suzanne de Brunhoff, “Karl Marx’s Theory of Money and Credit,” in A Handbook of Alternative Monetary Economics, ed. Philip Arestis and Malcolm C. Sawyer (Northampton, MA: Edward Elgar, 2007); Duncan Foley, “On Marx’s Theory of Money,” Social Concept 1, no. 1 (1983); “Money in Economic Activity,” in The New Palgrave: Money, ed. John Eatwell, Murray Milgate, and Peter Newman (London: Palgrave Macmillan, 1989); Duncan Foley, “Marx’s Theory of Money in Historical Perspective,” in Marx’s Theory of Money: Modern Appraisals, ed. Fred Moseley (New York: Palgrave Macmillan, 2005). Ramaa Vasudevan, “The Significance of Marx’s Theory,” Economic and Political Weekly 52, no. 37 (2017) provides a review of the analytical structure of Marx’s theory of money.

  2. 2.

    Engels in the preface to Karl Marx, Capital, Vol. III (London: Penguin, 1981), 84.

  3. 3.

    Karl Marx, Grundrisse (London: Penguin, 1973), 151.

  4. 4.

    Peter Kenway, “Marx, Keynes, and the Possibility of Crisis,” Cambridge Journal of Economics 4, no. 1, (1980); James Crotty, “The Centrality of Money, Credit and Financial Intermediation in Marx’s Crisis Theory,” in Rethinking Marxism, ed. Steven Resnick and Richard Wolff (New York: Autonomedia, 1985).

  5. 5.

    Karl Marx, Grundrisse (London: Penguin, 1973), 148–9.

  6. 6.

    Ibid., 150–1.

  7. 7.

    This argument is made in Vasudevan, “The Significance of Marx’s Theory,” Economic and Political Weekly 52, no. 37 (2017).

  8. 8.

    Marx, Capital, Vol. III, chapter 25.

  9. 9.

    Ibid., 727.

  10. 10.

    Zoltan Pozsar, “Shadow Money: The Money View,” Office of Financial Research Working Paper 14-04 (2014) provides an overview of contemporary shadow money. Ramaa Vasudevan, “Shadow Money in the Nineteenth Century,” in “The Nineteenth Century: Is Marx Relevant for Understanding Contemporary Shadow Money,” Review of Political Economy 30, no. 3 (2018) discusses modern shadow money through the lens of Marx’s writings on the bill market of his time.

  11. 11.

    Ramaa Vasudevan, “From the Gold Standard to the Floating Dollar Standard: An Appraisal in the Light of Marx’s Theory of Money,” Review of Radical Political Economics 41, no. 4 (2009); Vasudevan, “Shadow Money in the Nineteenth Century” provide a fuller articulation of this argument.

  12. 12.

    Perry Mehrling, “The Inherent Hierarchy of Money,” in Social Fairness and Economics: Essays in the Spirit of Duncan Foley, ed. Lance Taylor, Armon Rezai and Thomas Michl (New York: Routledge, 2012).

  13. 13.

    Karl Marx, A Contribution to a Critique of Political Economy (Chicago: International Library Publishing, 1972), 235.

  14. 14.

    Ibid., 235.

  15. 15.

    Vasudevan, “Shadow Money in the Nineteenth Century” elaborates this argument.

  16. 16.

    Zoltan Pozsar et al., “Shadow Banking,” Federal Reserve Bank of New York Staff Report, no. 458, 2010.

  17. 17.

    Marx, Capital, Vol. III, 623–4.

  18. 18.

    Vasudevan, “From the Gold Standard to the Floating Dollar Standard.”

  19. 19.

    This argument is put forward in ibid.

  20. 20.

    See ibid.

  21. 21.

    Vasudevan, “Shadow Money in the Nineteenth Century.”

  22. 22.

    Karl Marx, Capital, Vol. I (London: Penguin, 1976), 919.

  23. 23.

    Ibid.

  24. 24.

    Ibid.

  25. 25.

    Marx, Capital, Vol. III, 572.

  26. 26.

    Andrew G. Haldane and Piergiorgio Alessandri, “Banking on the State,” Paper Presented at the Federal Reserve Bank of Chicago Twelfth Annual International Banking Conference (2009).

  27. 27.

    Marx, Capital, Vol. III, 442.

  28. 28.

    Ibid., 443.

  29. 29.

    Ibid., 449.

  30. 30.

    Ibid., 920.

  31. 31.

    Ibid., chapter 19, 20.

  32. 32.

    Ibid., 528.

  33. 33.

    Ibid., 516.

  34. 34.

    Costas Lapavitsas, “Two Approaches to the Concept of Interest-Bearing Capital,” International Journal of Political Economy 27, no.1 (1997).

  35. 35.

    This argument is elaborated in Duncan Lindo, “Political Economy of Financial Derivatives: A Theoretical Analysis of the Evolution of Banking and Its Role in Derivatives Markets” (PhD Thesis, SOAS, 2013).

  36. 36.

    Marx, Capital, Vol. III, chapters 31, 32.

  37. 37.

    Vasudevan, “From the Gold Standard to the Floating Dollar Standard.”

  38. 38.

    Pierre-Olivier Gourinchas and Hélène Rey, “From World Banker to World Venture Capitalist: US External Adjustment and the Exorbitant Privilege,” NBER Working Paper 11563 (Cambridge, MA: National Bureau of Economic Research, 2005).

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Authors and Affiliations

  1. Department of Economics, Colorado State University, Fort Collins, CO, USA

    Ramaa Vasudevan

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  1. Ramaa Vasudevan
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Editors and Affiliations

  1. Asian Development Research Institute, Patna, Bihar, India

    Shaibal Gupta

  2. Department of Sociology, York University, Toronto, ON, Canada

    Marcello Musto

  3. London School of Economics, London, UK

    Babak Amini

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Vasudevan, R. (2019). Money, Power, and Capitalism: Marx’s Theory of Money and the Contemporary State-Credit Standard. In: Gupta, S., Musto, M., Amini, B. (eds) Karl Marx’s Life, Ideas, and Influences. Marx, Engels, and Marxisms. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-24815-4_11

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