Alternative Theories of Money and Finance
Chapter 2: A Marxian theory of money, credit and crisis
It is in the foundation of capitalist production that money confronts commodities as an autonomous form of value, or that exchange-value must obtain an autonomous form in money, and this is possible only if one particular commodity becomes the material in whose value all other commodities are measured, thereby becoming the universal commodity, the commodity par excellence, in contrast to all other commodities. Marx (1990, Vol. 3, p. 648) INTRODUCTION It is possible to contend that Marx’s theory of money is imbued with a very modern vision and in many ways prefigures the theories of Keynes (Sardoni, 1987). This is most evident in his treatment of credit and financial crises. Marx’s theory establishes a close connection between the forms and functions of money expressed as the universal equivalent of exchange-value. The derivation of money assumes an independent form of value and reflects the existing social relations of production. Money itself precedes capitalism and evolves historically to perform the various functions assigned to the sphere of exchange and general circulation. These various forms of money are inextricably bound up in the functions performed by the universal monetary equivalent. It will be argued that specific capitalist forms of money correspond with the evolution of modern banking and the complex instruments of creditcreation and that the theory of a monetary circuit provides a more coherent analytical framework, which augments Marx’s original treatment of credit money. Marx’s original theory was based upon commodity money. But this does not necessarily imply that only commodities act...
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