Alternative Theories of Money and Finance
New Directions in Modern Economics series
Chapter 1: A monetary theory of production
Nowadays people know the price of everything and the value of nothing. Oscar Wilde, The Picture of Dorian Gray (1891) INTRODUCTION The essential aim of this chapter is to reinterpret Marx’s theory of value from the standpoint of a modern monetary economy. In the tradition of the ‘Rubin’ school, it will be argued that the concept of abstract labour provides an analytical link between the two moments of the circuit of capital: between the process of the valorization of capital, on the one hand, and the realization of exchange-value, on the other. Marx’s original theory of value will be reconstructed to establish a connection between the concept of abstract labour and money. Consistent with Rubin’s (1972) interpretation, it will be argued that the law of value constitutes essentially two dialectical moments: (1) the potential or latent rate of exploitation in the sphere of production; and (2) the social validation of production as exchange-values. Abstract labour mediates this transformation from potential to actual value. Concrete labour becomes abstract in the exchange between commodities and money. Since money represents the validation of social abstract labour, the magnitude of value as embodied labourtime cannot be measured independently from the sphere of exchange. Money is the sole measure of abstract labour (Bellofiore, 1989, p. 10). This new interpretation makes it possible to formulate a noncommodity theory of money and sheds new insights into some of the perennial controversies over the essential properties of capitalist money. 15 16 The economics of financial turbulence THE MONETARY...
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