For several decades following the end of the Second World War the theory of money remained a relatively neglected part of Marxist economics, particularly within Anglo-Saxon Marxism which has gradually come to play a leading role in Marxist theory. This rather warped evolution of Marxist economics merits examination as a separate topic in the history of economic thought, particularly as monetary phenomena form such an integral part of Marx’s oeuvre. Since the late 1970s, however, things have begun imperceptibly to change and a corpus of work has emerged which is a recognisable theory of money, although it does not yet constitute monetary theory in the full sense of the term.
This development reflects the transformation of capitalism during the last four decades: money and finance have assumed an extraordinary place in the operations of both economy and society since the 1970s. It is not surprising that a Marxist theory of money has gradually begun to emerge in that context. However, the more recent theoretical output will not be presented and discussed in this essay, partly because it still lacks the internal coherence that would allow for such a discussion. There is no doubt, nonetheless, that the gradually emerging theory is heavily based on Marx’s own work on money, found mostly in The Contribution to Political Economy, The Grundrisse, and the three volumes of Capital.1 This essay aims to make a positive contribution to the emerging theory by summing up Marx’s distinctive approach to money, particularly in relation to fundamental writings from other theoretical traditions. References to selected recent developments in Marxist monetary theory will be made throughout.
More specifically, there are four fundamental issues in Marx’s writings on money that provide the backbone for any Marxist theory of money. First, the presence and role of money in society in general; second, the logical and historical emergence of money; third, the forms and functions of money; fourth, the transformation of money into capital. A Marxist approach to money could be usefully outlined by considering these issues in turn.
Money is prevalent in capitalist society, but it also is an ancient economic form frequently encountered in non-capitalist societies. Consequently, the question of its economic role has an inherent generality, which could be captured by counter-posing two general forms of organisation of the economic life of society, both of which were alluded to by Marx in The Grundrisse.2
First, society could allocate resources consciously on the basis of centralised power; along similar lines, society could distribute the final product on the basis of aggregate principles that could include command, custom, hierarchy, and tradition. In such a society money would play a marginal role and, at the limit, it could even be excluded altogether. The range of societies that could potentially fall into this category is very large: from the palace economies of the ancient Middle East to the socialist societies of the twentieth century. Second, society could allocate resources to economic tasks as well as distributing the final product through impersonal market processes, thus severely limiting the importance of unconscious processes. The role of money in a society of this type would be of critical importance, and nowhere more than in a capitalist society in which even labour power would be allocated through market processes.3
Thus, for Marx, the role of money in capitalist society is to be the unconscious and automatic organiser of economic life: money is the nexus rerun of capitalism.4 Specifically, money allows for the accounting of available resources; for the commensuration of claims to the final product; and for the transfer of claims from the present to the future. The circulation of money facilitates the transfer of resources to those who wish to deploy them; its hoarding is a method of storing claims on resources, but also a means of effecting radical changes in resource allocation. Consequently, money accrues enormous social power in capitalist society.
This aspect of the Marxist theory of money is reminiscent of contemporary economic, sociological and anthropological theories that treat money, first, as a contrivance recording contributions to production and thus claims on goods; second, as an accounting device to render output measurable; and third, as a technical mechanism facilitating the transfer of resources; or even as a means of connecting current expenditure of resources to future claims on output.5 However, for Marxist monetary theory, money’s ability to operate in these ways is a result of the social relations that underpin markets. Money is never a mere technical device that solves economic and social problems, but always the crystallisation of social relations in societies pivoting on exchange.
Moreover, it is clear that the organising role of money is performed in a blind, automatic and essentially “foreign” way among participants in exchange. Money negates the conscious and “relational” mode of organisation of societies based on command, custom and hierarchy. It does not need prior networks of obligations and authority to bring about the necessary allocation and distribution of resources since it draws on the impersonal mechanisms of the market. It follows that societies which integrally contain both exchange and money could potentially break out of the tyranny of traditional obligations and custom; but the price they would pay would be the loosening of social links. Heavily monetised societies inevitably veer toward the cold calculation of monetary returns.
The issue that immediately arises at this point is, if money is so vital to certain types of society, how does it emerge? Is it a spontaneous response to society’s intrinsic need for an organising medium, given the absence of conscious organisation? Marx provided a remarkable answer to this question.6 Money is certainly a spontaneous outcome of exchange interactions, but it does not emerge within human societies; rather, it emerges where different societies meet and trade with each other. In the course of history, the internal affairs of human societies, including the allocation of resources, have tended to be organised through customary, hierarchical and generally “relational” mechanisms. Commodity exchange, and thus money, arose where different societies came into contact with each other; at those points “relational” mechanisms were weak, or altogether absent. In a profound sense, for Marx, both markets and money are external to human society, though they can certainly penetrate it, disrupting existing relations and creating new ones that incorporate money.
If money has an organic presence in certain types of society, what is the logical and historical process through which it emerges? One answer to this fundamental question was famously provided by Adam Smith, who contrasted barter to monetary exchange and concluded that barter would systematically break down as commodities would not necessarily be available in the right quantities, at the right time and at the right place to allow for desired transactions to take place.7 Money, or a commodity that everyone would find acceptable, would increase the efficiency of transacting, and thus commodity owners would benefit if they carried some money when they went to market.
Smith’s argument about the greater efficiency of monetary exchange compared to barter is, of course, indisputable, but tells us nothing about the emergence of money. For, where does this marvellous commodity that all would find acceptable come from, and through what processes? The gravity of this issue began to be realised only in the 1860s and 1870s, as the Classical School declined and was followed by Neoclassicism, the German Historical School and Marxism. They offered distinctive answers, all of which continue to shape contemporary theorisations of the emergence of money. It is also notable that Marx was the first great economist to tackle the question in depth.
The Neoclassical School treats capitalism as a collection of markets. Ideally, and as is assumed by general equilibrium analysis, markets are complete and foresight by participants is full. In that context, there is no room left for money: there is no reason for commodity owners to hold some of their wealth in a barren thing that could not even be consumed.
Quite naturally, therefore, the most powerful neoclassical argument on money’s emergence was provided by Austrian neoclassicals, who typically reject general equilibrium analysis, focusing instead on the actions of economic agents. Carl Menger postulated that money is the spontaneous outcome of market interactions among commodity owners.8 Commodities have “marketability,” which is the ease of being exchanged with another, and which depends on the perception by other commodity owners. “Gifted” commodity owners ascertain the superior “marketability” of one commodity and through use increase that commodity’s “marketability” until it dominates all others. This is an elegant argument, but it suffers from two weaknesses: first, the assumption that commodities inherently possess “marketability” is entirely arbitrary; and second, it treats money primarily as a means of exchange, which is a narrow way to analyse such a powerful and complex economic phenomenon.
The German Historical School treats capitalism as complex social system with a wealth of institutions, but has offered no theoretical view of its functioning. Money allows exchange to proceed, but also facilitates a broad range of other economic and social phenomena. Contrary to Neoclassicism, money was not seen as a spontaneous outcome of commodity exchange. The most coherent formulation of this approach was by Knapp who provided the foundations for the current of “chartalism.”9 For Knapp, money is the creation of non-market forces and processes which are typically associated with state power. The state is the creator of money, which is essentially a legal convention that allows for the accounting of value as well as for a range of other functions.
The German Historical School has ceased to exist but its legacy on money is still very much alive.10 It is easy to see the appeal of a theory that stresses the broad functioning of money in capitalism, and even links money’s emergence to the state. Money appears to be a fundamental aspect of all human societies as well as a key institution that is inherently linked to state power. In contemporary capitalism this approach seems particularly well-suited to explaining the role of the central bank in supporting monetary circulation. Its weakness, however, is apparent: an enormously prominent economic phenomenon is accounted for through the arbitrary power of the state. It is one thing to accept that the state and money are closely linked, but quite another to claim that money is inherently a creature of the state.
The Marxist School provided its own distinctive answer to the question. Indeed, Marx proudly claimed to have solved the “riddle of money.”11 Similarly to Neoclassicism, money was treated by Marx as a spontaneous outcome of interactions among commodity owners; but, like the German Historical School, Marx also saw money as relying integrally on social institutions and possessing a broad role in both economy and society. For Marx, money is the spontaneous and necessary encapsulation of social relations among commodity owners, a claim with two distinctive aspects.
First, money is an outcome of the contradictory unity of use value and exchange value in a commodity. As use values commodities are available for specific purposes, in specific quantities, times and places; i.e., they are particular. As exchange values commodities are entirely non-specific, highly divisible and in principle available at any place and time; i.e., they are general. In the course of exchange the particular aspect of the commodity continually contradicts the general and thus exchange breaks down. Money offers a resolution of this contradiction by detaching the general from the particular aspect of the commodity. Specifically, money represents exchange value for all commodities, and in relation to money all commodities become simply use values. The contradiction is thus overcome and direct exchange is replaced by monetary exchange. Nonetheless, the contradiction is also reproduced at a higher level as monetary exchange is prone to gigantic breakdowns.12
Second, and as is apparent from the first, a logical argument is necessary regarding the process through which the contradiction between use value and exchange value would be overcome. Marx developed this argument in the first chapter of Capital in connection with the evolution of the form of value. Thus, the form of value traverses four stages: the accidental, the expanded, the general and the money stage. In the first stage two commodity owners happen to come into contact and one (the active, or relative party) leads the interaction with the other (the passive, or equivalent party). In doing so the owner of the relative assigns rudimentary direct exchangeability to the equivalent. In other words, the action of the relative makes it possible for the equivalent to buy the relative. The emergence of money occurs as rudimentary direct exchangeability is generalised through the four stages of the form of value, eventually becoming universal and attached to a single commodity. Money emerges as the universal equivalent, or the independent form of value; it is the commodity than can buy all other commodities.13
Marx’s logical derivation of money’s emergence through the development of the form of value is an astonishingly powerful performance, although his argument is not watertight. There is a lot more to be said about the role of social institutions, customs and practices among particular societies – i.e., non-economic factors – in inducing the passage of the form of value through its various stages. Marx himself explicitly recognised that the passage to the final stage necessarily rests on the physical features and the customary uses of the leading money commodity, i.e., gold.14 Thus, money’s emergence is inextricably bound with the social and physical uses of particular commodities.
To sum up, for Marxist theory, money is an encapsulation of relations among commodity owners, a necessary outgrowth of market interactions. Money plays a pivotal economic and non-economic role in societies that integrally contain commodity exchange, but it is not the creation of non-economic forces, such as the state. Rather, money is a creature of commodity exchange, generated spontaneously and necessarily by commodity interactions. Specifically, money is the independent form of value, the commodity that can buy all others, which resolves the problems of direct exchange. As such, it delivers certain key functions in commodity exchange, while assuming a variety of forms.
In the analysis of the functions and forms of money, Marxist economics comes close to having a monetary theory, for that is where the relationship between money, output, and prices is explored in some depth. Money is shown to have three fundamental economic functions that are closely related to the forms taken by it; the correspondence between function and form is of paramount importance in shaping money’s impact on economic activity, thus providing a framework for monetary theory.15
The first function of money is to measure values and thus to account for prices. In several places in his work, Marx appeared to think that money is able to measure value because the money commodity contains value.16 Thus, if a natural unit of commodity x contained, say, 6 hours of abstract labour, while a natural unit of the money commodity (perhaps a gram or an ounce), g, contained, say, 3 hours of abstract labour, the value of x would be expressed as x/g = 2 (natural units of the money commodity). Money in this connection would be acting as the measure of value, or more specifically, as the “extrinsic” measure of value in contrast to the “intrinsic” measure of value, which would, of course, be hours of labour.
If, moreover, each natural unit of the money commodity was conventionally divided into standard units defined, say, by the state – i.e., coins – money would function as a unit of account (or standard of price) in addition to functioning as measure of value. Assuming that each natural unit of g was divided into, for instance, 3 conventional units, each of which was called a dollar, $, the value of x would be expressed as its money price, px = x/g/3 = $6.
Simple and powerful as this account is, it appears to hinge entirely on the existence of a money commodity with its own value. If the money in use was actually valueless, this procedure would seem unable to measure and render into price the value of a commodity.17 The implications would be profound, affecting the entire structure of Marx’s theory of value. Not surprisingly, there has been considerable difficulty within Marxist economics with contemplating a world in which there is no evident function for a money commodity, such as contemporary capitalism. But the difficulty rests on a misapprehension, partly caused by Marx.
For one thing, and contrary to what Marx appeared to think, a unit of measurement does not, in general, have to possess the same substance as the entity it intends to measure. Thus, length is measured in standard metres, but these do not correspond to a conventional object that has, say, “one metre length.” Rather, the standard metre is the distance covered by light in a vacuum in 1/299792458 of a second. That is, length is measured in terms of the speed of light and time. By analogy, commodity value does not need to be measured (and rendered into price) by a thing (i.e., money) that itself contains value.
Vital in this regard is the difference between ideal and real measurement of value. The example of measuring a commodity value given above would be an ideal measurement that would happen essentially in the mind. The real measurement of commodity value, on the other hand, would happen blindly and automatically through the repeated exchange of the commodity for money, eventually resulting in a market price. The money commodity (which contains value) would measure value in practice by being regularly and customarily exchanged for other commodities, rather than through an ideal division of the value content of a commodity on paper. The monetary problem would then be how the ideal would be related to real measurement of value. The point is, however, that the putative impossibility of value measurement by a valueless money would immediately be shown as a non-problem. Valueless money would be just as able as commodity money to perform the measuring function in practice, provided that it was generally accepted among commodity owners. The difference between commodity money and valueless money in this respect would refer to the relationship between the ideal and the real measurements, that is, to the range and stability of commodity price. To discuss this issue further it is necessary to move to the next function of money.
The second function of money is to act as means of exchange, or narrow means of circulation. Once again, the function of means of exchange must occur in practice, for which there must be regular and customary exchange of commodities for money. Furthermore, money as means of exchange would be naturally characterised by velocity and quantity. Marx was fully aware of the “equation of exchange” simply rendered as M = TP/V, where M is the quantity of money, V the velocity of money, and TP the total price of commodities exchanged.18 However, he rejected the Quantity Theory of Money: the total price of commodities, TP, is not determined by the quantity of money, M; rather, the determination runs in the opposite direction. M, in other words, is the quantity of money necessary in the sphere of exchange which would be spontaneously provided through a process of hoarding and dishoarding of money, given the prices of commodities and money’s velocity.
The function of means of exchange has major implications for the form of money. The most intuitive form of the money commodity as means of exchange is, of course, coin struck by the state. However, as it circulates coin is inevitably worn, i.e., it loses some of its material content, thus becoming a symbol of itself. In this way a path is opened for the state to issue proper symbols of the money commodity, which are typically cheap metallic coins, or valueless paper money, both based on state fiat. It is a historical fact that in the eighteenth century, as capitalism began to take root across Europe and North America, commodity money began to give way to valueless symbols of itself. Fiat money is an integral and fundamental aspect of mature capitalism to the present day; however, its functioning has become intertwined with credit money, as is shown below.
It is immediately clear that, as means of exchange, fiat money differs from commodity money in terms of its quantity. The quantity of commodity money is determined spontaneously through hoarding and dishoarding of money, given prices and velocity; in contrast, the quantity of fiat money is determined by the state. It follows that, if the state issued fiat money in excess of the amount necessary in circulation, the total price of commodities would have to rise, assuming that velocity remained constant. Marx accepted this pure version of the Quantity Theory of Money in the case of fiat money and under exceptional conditions.19
However, for Marx, the pathological rise in prices as a result of increases in the quantity of fiat money would be a reflection of the malfunctioning of money as measure of value. The true difference between commodity and valueless fiat money, in other words, is not that the latter cannot measure value, which it evidently can in practice. It is, rather, that the real accounting of value (the rendering of value into market price) by valueless money depends also on the quantity of money; by this token, it could even be manipulated by the state. To put it differently, although valueless money could certainly measure value, its rendering of value into price could be volatile and even arbitrary.
The third function of money, for Marx, is to act “as money,” a truly distinctive function indicating the special place held by money in society. To be more specific, Marx subdivided the “as money” function into three: hoarding, means of payment and world money, each of which conveys different aspects of “money as money.” In performing this composite function money is able to stand outside the process of exchange confronting it as the independent form of value and the material crystallisation of exchange relations. Money “as money” demonstrates its exceptional economic and social power, particularly in capitalist society.
The hoarding function is fundamental to Marxist monetary theory for a variety of reasons. Hoards of money are a necessary counterpart to circulating money; they act as pools that spontaneously regulate the quantity of money in circulation keeping it in line with commodity prices and velocity. Hoards of money also reflect the withdrawal of money from circulation and hence the withdrawal of aggregate demand from capitalist markets.20 Finally, hoards of money represent concentrations of value in the monetary form which are potentially available for lending, i.e., they are latent money capital. Hoards of money, therefore, are a foundation of the credit system and of the provision of credit in a capitalist economy.
The payment function is equally fundamental and, for Marx, defines “broad means of circulation,” thus opening the path for the analysis of credit. It is worth stressing that the Marxist theory of credit rests on the prior existence of money, i.e., it is a monetary theory of credit. Marx certainly had no truck with the idea that credit is the primary relationship among exchange participants, i.e., with a credit theory of money. Rather, credit relations emerge out of monetary relations. To be specific, money as the universal equivalent splits the act of sale, C – M, from the act of purchase, M – C, where C is commodity and M is money. Money is further capable of splitting the act of sale into the advance of the commodity against a promise to pay, C – IOU, followed by the settlement of the promise to pay through the payment of money, IOU – M, where IOU is an instrument of indebtedness (promise to pay). The most fundamental form of credit is thus trade or commercial credit which thoroughly permeates, indeed underpins capitalist circulation. On the basis of trade credit more complex relations of credit also emerge which involve the lending of money.
By opening the way for credit relations, money also creates enormous room for its own evolution. Thus, the IOUs created in the course of credit transactions could begin to circulate as money, if there was sufficient trust and confidence in the issue’s ability to honour the promise to pay. This is the foundation of credit money, which is a form of money that is clearly different from both commodity and fiat money. Credit money rests on a promise to pay that must be eventually settled, while commodity money and fiat money are not promises to pay but rather the final means of payment. Furthermore, and unlike fiat money, credit money is not a symbol of commodity money, even though it is also valueless. Rather, credit money is a privately created form of money that rests on the issuer’s promise to pay and is typically generated when a private debt is created.
Credit money is the dominant form of money in advanced capitalism taking primarily the form of promises to pay by (or claims on) banks. Thus, the banks that usually issue credit money tend to hold the private debts of others against their own promises to pay on their balance sheets. For this reason, credit money has a protean character and does not need to have a corporeal existence but could be a book entry or an electronic signal.
The greatest transformation of credit money in advanced capitalism occurs through its systematic linking with state-issued fiat money via the central bank. Contemporary central banks are public institutions sitting atop the credit system and providing their own promises to pay as final means of payment. The promises to pay by contemporary central banks – both banknotes and deposits held by private banks – are not convertible into anything other than themselves. The state proclaims central bank money to be inconvertible legal tender, even though such money is created by the central bank as it makes loans to others. Contemporary legal tender is fiat money backed by the power of the state, not least as the central bank normally holds state instruments of debt against it.
Control over central-bank-issued fiat money in mature capitalism is a cornerstone of the state’s ability to intervene in the sphere of finance and in the economy more generally. Command by central bank over the final means of payment allows it to influence interest rates, thus impacting on credit provision across the economy. Equally, it allows the central bank to provide liquidity, i.e., the final means of payment, in enormous volumes at times of crisis, thus preventing generalised collapses of the financial system. This is the basis of monetary policy in advanced capitalism.
Finally, the third subdivision of “money as money” is “world money,” arguably the most complex, least developed and most innovative aspect of Marx’s analysis of money in mature capitalism. For Marx, money in the world market is distinct from money in domestic markets. The world market is an anarchic entity without a unifying set of institutions supervised by a single state authority, and nor does it contain a structured credit system, though it certainly contains vast markets of finance. The world market is also the terrain for interaction among private capitals that are based in separate countries as well as among the states of these countries. There are payments and value transfers to be made among both enterprises and states which necessitate the use of a special form of money that could transcend national borders. This is “world money” to which all countries and private capitals must have access, if they wish to participate in the world market.
Marx claimed that as “world money” money would revert to the commodity form and become gold once again.21 This is clearly a reflection of the institutional framework at the time of his writing, i.e., of the Gold Standard during the second half of the nineteenth century. The twentieth century has presented the remarkable phenomenon of certain national monies acting as quasi-world money, at times without even being convertible into a commodity money, or indeed into anything other than themselves. World money has become a partially managed form of money created by nation states. The benefits drawn by the states that could issue quasi-world money are substantial, including the ability to pay abroad by simply creating more domestic money, i.e., partly fiat money.
The issue that remains for discussion is the connection between money and capital. Needless to say, money as an economic and social phenomenon long predates the emergence of the capitalist mode of production. For money to emerge and function it is enough to have broad commodity exchange rather than capitalist production and circulation, which involve absolute property over the means of production and the hiring of labour-power for wages by the capitalist class. At the same time, money remains the fundamental form of capital and it systematically becomes capital, when capitalist social conditions are prevalent. What, then, is the connection between money and capital?
A vital distinction in this regard is that between money operating simply as money and money operating as capital. For Marx, money is the natural starting and finishing point of the circuit of productive capital, summed up as M – C … P … C' – M', where M is money, C are commodity inputs (means of production and labour power), P is production, C' is commodity output, and M' is money revenue.22 Thus, money is the form in which capital normally commences its circuit as well as the form to which capital must return (plus profit). Money also provides the objective of the circuit in the form of profit, i.e. the increment of M' over M. Money, finally, is one of the means of achieving that objective since it is deployed to hire workers and purchase means of production. The characteristic motion of money as capital, therefore, could be abbreviated to M – C – M'.
In contrast, the characteristic motion of money as plain money is best presented as C – M – C', i.e. as a summation of pure market transactions (or simple exchange) discussed in sections two and three of this essay. The motivating purpose of C – M – C' is merely the acquisition of different use values, which is facilitated by money. The difference between money operating as capital and money operating as plain money is, thus, striking.
The theoretical question then becomes: how and under what conditions does money begin to operate as capital? In the Grundrisse, Marx explored the possibility that money as capital could emerge out of money as money through the dialectical unfolding of the latter, particularly through the ability of money to stand aloof from circulation and indeed to rise above it.23 This is not a persuasive approach for it contradicts the experience of history, and collapses the rich diversity of social factors necessary for the emergence of capitalism into the internal unfolding of the universal equivalent. In contrast, in Capital Marx rightly focused on the commodity labour-power as the defining feature of capitalism since it creates value and surplus-value.24 Money could systematically become capital only if the social and historical conditions for the emergence of capitalism were satisfied including, above all, the formation of the capitalist and the working class.
That is not to deny that money could frequently become capital even under social and historical conditions that are not capitalist. This is clearly attested when money acts as commercial capital in pre-capitalist societies. It is even more vividly seen when money acts as the means of credit across societies. Thus, trade credit and even the plain lending of money are practices that could be found in a range of non-capitalist societies. The point is though, that in capitalist society mechanisms emerge which systematically collect money, transform it into capital and make it available for purposes of capitalist accumulation. This is precisely the content of the credit (and more broadly the financial) system.25
In sum, within mature capitalism, the transformation of money into capital is an integral and institutional process reflecting, on the one hand, the existence of wage labour and private property over the means of production and, on the other, the creation of social mechanisms that systematically turn money into capital. Even so, money continues to function also as plain money, for instance, in the expenditure of wage income by workers. The historical complexity of money’s social and economic role is actually enhanced by its systematic transformation into capital.
1 Respectively, Marx (1970; 1973; 1976; 1978; 1981).
2 See, for instance, Marx (1973, 156–74). Marx’s fundamental argument has been neatly summed up by Hilferding (1981, ch. 1).
3 The conceptual distinction between the “acatallactic” and the “catallactic” organisation of society and the corresponding role of money is fundamental to the Austrian School in economics, see, for instance, Mises (1998). It is also fundamental to Polanyi’s analysis of capitalism (Polanyi, Arensberg and Pearson 1957).
4 See, for instance, Marx (1976, 228).
5 See, indicatively, Davidson (1978); Hart (1986); Kocherlakota (1998).
6 See Marx (1973, 223); see also, Marx (1976, 447–8).
7 See Smith (1904, vol. 1, ch. 5).
8 See, for instance, Menger (1892).
9 See Knapp (1924).
10 This is essentially the origin of the contemporary chartalist current of Modern Monetary Theory; see, for instance, Wray (2000).
11 See Marx (1976, ch. I, sec. 3).
12 See Marx (1970, 42–6).
13 See Lapavitsas (2005).
14 See Marx (1976, 162–3).
15 See Lapavitsas (1991).
16 See, for instance, Marx (1976, 192).
17 This partly explains the appeal of the concept of the Monetary Expression of Labour Time (MELT), developed separately and independently by Duménil (1980) and Foley (1982). Strictly speaking this work is not monetary theory proper but an attempt to tackle the perennial “transformation problem.” Foley has, nonetheless, made an outstanding contribution to the revival of Marxist monetary theory (see, for instance, Foley 1983). The MELT is defined as the ratio of total money value added over total current living labour per period. It could thus be interpreted as the inverse of a kind of “value of money,” and be deployed to express values into money in particular instances. For this reason the concept has been extensively deployed in the recent revival of Marxist monetary theory, see, for instance, Moseley (2005). It has also been deployed in monetary work produced by post-structuralist Marxism in the tradition of Stephen Resnick, for instance, Kristjanson-Gural (2008). The point to bear in mind is that the MELT is defined ex post facto as the ratio of two aggregate quantities resulting from completion of the circuit of total social capital. This is a very different “value of money” from the one traditionally deployed in monetary theory which is defined prior to the completion of the circuit and indeed plays a decisive role in setting aggregate prices.
18 See Marx (1976, 210–20).
19 See Marx (1970, 118–19).
20 See Lapavitsas (2000).
21 See Marx (1976, 240).
22 See Marx (1978, ch. 1).
23 See Marx (1973, 250–64).
24 See Marx (1976, ch. 6).
25 Discussed in Marx (1981, pt. 5).
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