At first glance one does not know what to make of the analyses of money which appear at the beginning of Capital. Marx began his study of capitalist production with an analysis of commodities, exchanges, and circulation in terms of a process of commodity production without socially determined conditions: money would at first appear not to have a capitalist context. Why did Marx not rather follow Ricardo, who proposed to choose a commodity standard based on the social conditions of commodity production?2 Schumpeter thought the theory of money one of the weak points of Capital, and considered Marx inferior to Ricardo on this question.
The lack of attention given to this part of Capital seems to have represented an acceptance of Marx’s surprising approach. For some Marxists money, without any scientific meaning, has become a symbol of the “reification” of social relations between private producers. Others have gone along with the letter of Marx’s analyses without looking for logical, rather than historical, reasons why they are at the beginning of Capital. But this is not due to the fact that a commercial economy preceded capitalism. Otherwise Marx’s analysis would have been altogether different. It would have taken account of the fact that capitalism is still a commercial economy, and linked the monetary character of money to the requirements of the form of production. It would, for example, have taken up Ricardo’s suggestion that the average proportions of labor and capital determine the choice of a money, so that money would be the standard commodity of a particular form of commodity production.
In contrast Marx, before examining credit under capitalism, gives us a study of money which disregards the organic composition of capital. It is this abstract study of the monetary characteristics of money which leads into the analysis of the financing of capitalist production. Not only is money studied in abstraction from capitalism, but its place at the beginning of Capital is not dependent on the priority of pre-capitalist economies. The question is how this method, doubly separated from history, makes it possible to understand the economic role of money.
Marx knows that his analysis differs profoundly from that of other economists, and he gives the reason. “It is one of the chief failings of classical economy that it has never succeeded, by means of its analysis of commodities, and, in particular, of their value, in discovering that form under which value becomes exchange-value. … We consequently find that economists, who are thoroughly agreed as to labour time being the measure of the magnitude of value, have the most strange and contradictory ideas of money, the perfected form of the general equivalent. This is seen in a striking manner when they treat of banking, where the commonplace definitions of money will no longer hold water.”3
To determine the nature of money, the point of departure must then be a “deductive” analysis, without regard to its concrete forms and its role in capitalism. This should enable us to avoid two errors which hinder our understanding of the role of money in capitalism, the confusion of money with commodities and of money with capital.
To put together the meaning of this theory of money, which first appears in the initial pages of the first volume and is the framework for the notes on credit in Part 3 of Volume II, is to read Capital as a whole. L. Althusser4 has shown the differences between Marx’s theories in Capital and those of the classical economists, thereby furnishing a basis for understanding how they all fit together. A misunderstanding of the premises of Marx’s theory of money may prevent one from understanding everything that follows, especially the relation between money and credit. In this way a large part of the analyses of the financing of accumulation and the role of credit, contained in Parts 2 and 3, is lost. (Thus H. Denis, who supports a labor-value theory of money much closer to Ricardo than to Marx, has little to say about them.5) Or else these analyses are used in the examination of credit and banks, but without being organically linked to the theory of money in Part 1. This disassociation has probably been one of the reasons for the overestimation of the role of “finance capital,” in the manner of Hilferding. In either case it has both reflected and led to a poor understanding of the relation that exists between the different parts of Capital.
But what is the point of thus illuminating the coherence of a theory if that theory has no relevance? Have there not been such radical changes in monetary systems in the past half century that, when one discusses money, one is talking about something entirely different from what Marx was dealing with? Even an explanation solely in terms of the “history of ideas” would then risk being full of misinterpretations.
But this objection is not valid, because the content of a theory of money does not depend mainly on the “particular kind of money” used (metallic money or convertible paper or inconvertible paper). What needs to be explained is the economic basis for the existence of money, not merely as a measure of value and a means of circulation, but as the object of a specific demand even when its predominant form is inconvertible paper. This is the monetary characteristic of money which is the basis of its economic existence; “we cannot get rid of money even by abolishing gold and silver and legal tender instruments.”6 Marx discovered this eighty years before Keynes. It is necessary to recall how and why.