The Contributions of Marx, Keynes and Kalecki
Chapter 2: The Marxian Notion of a Monetary Economy and the Critique of Say's Law
2. The Marxian notion of a monetary economy and the critique of Say’s Law 2.1 INTRODUCTION In Marx’s analysis of the functioning of market economies, money plays a fundamental role. Money is the means through which all commodities express their exchange value; it is the universal equivalent. Any economic system based on the exchange of products through the market needs a universal equivalent in terms of which all the commodities can express their values. Otherwise, exchange itself could not take place.1 But in Marx’s analysis the role of money is also crucial to understand the possibility and the actual occurrence of economic crises due to an insufficient level of effective demand (general overproduction crises). It is Marx’s notion of money that allows him to criticize and reject Say’s Law, according to which such crises are impossible. Marx criticized Say’s Law in the form in which it was expressed by Ricardo. Ricardo’s version of the law, in turn, is strictly related to his theory of money and money prices. The next section is devoted to a brief exposition of Ricardo’s views, while section 2.3 deals with Marx’s critique. Central to Marx’s criticism of Ricardo and the rejection of Say’s Law is the notion of money hoards, that is to say the possibility that money is demanded to be kept idle, as a store of value, rather than being demanded exclusively as a means of circulation. Sections 2.4 to 2.6 look at Marx’s analysis of money hoards and the reasons why the...
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