The Trouble with Marxism (Part Three) or, How Fred Moseley M.E.L.T.ed Karl Marx
Pardon the extensive quotes of Marx here, but I need to establish a theoretical basis for my argument that will follow:
In Capital, Volume One, Chapter 3, Marx argues:
The price or money-form of commodities is, like their form of value generally, a form quite distinct from their palpable bodily form; it is, therefore, a purely ideal or mental form. Although invisible, the value of iron, linen and corn has actual existence in these very articles: it is ideally made perceptible by their equality with gold, a relation that, so to say, exists only in their own heads. Their owner must, therefore, lend them his tongue, or hang a ticket on them, before their prices can be communicated to the outside world.  Since the expression of the value of commodities in gold is a merely ideal act, we may use for this purpose imaginary or ideal money. Every trader knows, that he is far from having turned his goods into money, when he has expressed their value in a price or in imaginary money, and that it does not require the least bit of real gold, to estimate in that metal millions of pounds’ worth of goods. When, therefore, money serves as a measure of value; it is employed only as imaginary or ideal money. This circumstance has given rise to the wildest theories.  But, although the money that performs the functions of a measure of value is only ideal money, price depends entirely upon the actual substance that is money. The value, or in other words, the quantity of human labour contained in a ton of iron, is expressed in imagination by such a quantity of the money-commodity as contains the same amount of labour as the iron. According, therefore, as the measure of value is gold, silver, or copper, the value of the ton of iron will be expressed by very different prices, or will be represented by very different quantities of those metals respectively.
Perhaps, I am misinterpreting what Marx is saying here, but it seems to me he is stating what serves as money has significance to consideration of the price-form itself. If an ounce of gold has 15 times the labor contained in it as is contained in an ounce of silver, the price of a commodity denominated in units tied to an ounce of gold will be 1/15th that of a price tied to an ounce of silver. On the other hand, a given price using the gold standard, will have 15 times the value of that same price using the silver standard.
In both cases, the price of the commodity may be one dollar, but one dollar using the gold standard contains 15 times the value of one dollar using the silver standard. In both cases, one dollar may be the “money name” of an ounce of gold or an ounce of silver, but the value differs significantly depending on which metal serves as the standard of price. The term “one dollar” will represent more or less labor time depending on the commodity serving as the price standard. This relation, of course, is entirely independent of the commodity to which the price $1.00 is attached, although it has significance for it as well.
If it takes 15 hours of labor to produce one ounce of gold, 1 hour to produce one ounce of silver and ten minutes to produce one ounce of copper; the same price $1.00 will express far different labor times when an ounce of gold, silver or copper is the standard for one dollar. The same “money name”, $1.00, will alternately represent 15 hours, 1 hour, or ten minutes of labor. We cannot know what $1.00 signifies in terms of labor time, unless we know the standard to which this price refers.
So, the Marxist theoretician Fred Moseley is almost entirely wrong when he states non-commodity money can express the value of a commodity. He is right insofar as the price of the commodity expresses the value of the commodity but he is wrong to assume this expression is equal generally to the socially necessary labor time contained in the commodity itself. Non-commodity money does indeed always express the value contained in the commodity, but it always express this quantity as zero hours of labor time. No matter the quantity of non-commodity money we are dealing with — the price of a pair of shoes, a house, an aircraft carrier, or the US trade deficit with the People’s Republic of China — the quantity of non-commodity money to which we refer expresses the value of any of these as zero hours of labor.
This does not mean the commodities have no socially necessary labor time, nor that their values have ceased to exist; it simply means, this value was detached from the price of the commodity, when token money was detached from its commodity.
Value, socially necessary labor time, is dark matter in our economy — we cannot see it, but can only infer its existence. We infer its existence from the countless acts of exchange of unlike use values in the market. Since these use values are themselves not commensurable, we infer there is some hidden thing allowing us to compare them as trade-able goods. Money relations make this hidden other thing, socially necessary labor time, visible to us, but in a way this hidden other thing appears as a quality of money.
Moseley has absorbed this much of Marx’s theory, but then he stumbles, and, facing the puzzle of non-commodity money — he seems to forget the function of money in expressing socially necessary labor time, depends entirely on the thing serving as money. The circulation of commodity money is a reflex of the circulation of commodities themselves and dependent on this latter. In Marx theory, when the circulation of commodities increase, all things being equal, the amount of commodity money pulled into circulation must increase, when the circulation of commodities decreases, the quantity of money in circulation decreases.
There are, of course, a number of qualifiers to this which do not concern me right now — I am trying to get the general drift.
Generally speaking, just as the value of the commodity is expressed in a definite quantity of gold, so the total value of commodities in circulation, determined the total quantity of gold in circulation. This rule, however, DOES NOT apply to non-commodity money — and Moseley should know this. He should know it, because in chapter three of Capital Marx states:
The State puts in circulation bits of paper on which their various denominations, say £1, £5, &c., are printed. In so far as they actually take the place of gold to the same amount, their movement is subject to the laws that regulate the currency of money itself. A law peculiar to the circulation of paper money can spring up only from the proportion in which that paper money represents gold. Such a law exists; stated simply, it is as follows: the issue of paper money must not exceed in amount the gold (or silver as the case may be) which would actually circulate if not replaced by symbols. Now the quantity of gold which the circulation can absorb, constantly-fluctuates about a given level. Still, the mass of the circulating medium in a given country never sinks below a certain minimum easily ascertained by actual experience. The fact that this minimum mass continually undergoes changes in its constituent parts, or that the pieces of gold of which it consists are being constantly replaced by fresh ones, causes of course no change either in its amount or in the continuity of its circulation. It can therefore be replaced by paper symbols. If, on the other hand, all the conduits of circulation were to-day filled with paper money to the full extent of their capacity for absorbing money, they might to-morrow be overflowing in consequence of a fluctuation in the circulation of commodities. There would no longer be any standard. If the paper money exceed its proper limit, which is the amount in gold coins of the like denomination that can actually be current, it would, apart from the danger of falling into general disrepute, represent only that quantity of gold, which, in accordance with the laws of the circulation of commodities, is required, and is alone capable of being represented by paper. If the quantity of paper money issued be double what it ought to be, then, as a matter of fact, £1 would be the money-name not of 1/4 of an ounce, but of 1/8 of an ounce of gold. The effect would be the same as if an alteration had taken place in the function of gold as a standard of prices. Those values that were previously expressed by the price of £1 would now be expressed by the price of £2.
Note here, Marx does not state the quantity of tokens of money in circulation is determined by the sum of values in circulation; rather, he says a given quantity of tokens will represent a greater or lesser quantity of value depending on fluctuations in the circulation of commodities. Token money, therefore, does not behave at all like commodity money, because it has no value of its own and cannot reflect in itself the value of the commodities for which it is exchanged.
But, surprisingly, Moseley takes this very section of Capital and attempts to erect a theory for how non-commodity money can serve as its own measure of value, and standard of price. And, he does it by turning Marx completely on his head, by proposing something he and other Marxist academics call, The Monetary Expression of Labor Time (MELT). This argument says Marx held to the idea that money had to be a commodity, but this is not a necessary feature of his theory of money. They are, I admit, trying to “salvage” Marx’s theory in an age where non-commodity money is the rule, and to defend Marx against charges his theory is irrelevant or anachronistic.
“Marx,” his opponents state, “said money had to be a commodity, but look — the dollar is just worthless paper. It is money because we all agree it is money, and because the state guarantees it as universally acceptable in transactions.” (See, for instance, my posts on FOFOA.) Rather than making a materialist study of the dollar and other so-called non-commodity monies, MELT tries to twist Marx’s theory to fit these worthless symbols of money. Their starting point in this salvage operation begins where Marx discusses the money closest to debased dollars, inconvertible paper money.
But, in so doing, they neglect Marx’s warning, issued in the words of Marie Anne de Vichy-Chamrond, marquise du Deffand. Madame du Deffand, upon hearing of the miracle of St Denis, who, having had his head chopped off, picked up his severed head and walked six miles, preaching the Gospel, observed:
“The distance is nothing it is only the first step that is difficult.”
Marx’s warning in this regard is apt: the use of non-commodity money is not the least difficult to explain, rather we have to explain how it came to exist in the first place.