Money and Credit in a Socialist Economy

Abstract

In its origin and functions money is the nexus rerum of the market economy. As the unit of account, the means of exchange and the absolute form of wealth, money is certainly indispensable to the organisation of a specifically capitalist market economy. The classical thinkers of Marxism largely assumed that in a socialist economy, which would exclude the market, money would disappear. In practice, however, Soviet and East European socialism retained a form of paper money with some rather restricted social functions. Goods and services were ‘priced’, though their ‘prices’ were not market-determined. It is important to examine the nature and functions of socialist money in order further to develop our understanding of those collapsed societies, as well as shape our own vision of a socialist system that transcends the capitalist market order, with all its instability and inequality. In general the nature and functions of socialist ‘money’ vary with the form of organisation of the socialist economy.