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The Theory of Money and the Theory of Value

The most important point to emerge from Marx's theory of money

is the idea that money is a form of value. The difficulty with

this idea is that we are more familiar with money itself than

with value in other forms. But value does appear in

forms other than money. For example, the balance sheet of a

capitalist firm estimates the value of goods in process and of

fixed capital which has not yet been depreciated, as well as the

value of inventories of finished commodities awaiting sale. Each

of these aggregations of commodities has a value, usually

expressed as the equivalent of a certain amount of money, but it

is clear that neither goods in process nor fixed capital is

money. Marx views the value of commodities in this sense as

analytically prior to money; money can be explained according to

Marx only on the basis of an understanding of the value of

commodities.

Marx follows Smith in regarding value as the property of

exchangeability of commodities. In a society where exchange is

common, products come to have a dual character as use values and

as values. They have two powers: first, to satisfy particular

human needs and wants; and second, to exchange for other

products. This second power can be thought of quantitatively, as

an amount of exchangeability or command over other commodities.

The classical economists viewed value as a real, though socially

determined, entity, with its own laws of conservation and

motion. Value in this sense bears the same relation to

commodities as mass bears to physical objects. It is not

surprising that in societies where exchange is widespread value

takes on an independent form as money, as an expression of

general exchangeability.

Value is a central social reality for people; they constantly

think and talk about it directly or indirectly; they want some

way to transfer it directly among themselves, separate from

particular commodities.

This is what we mean by "money." It is the social expression of

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value separated from the concrete particularity of any use

value. With this emergence of money as the social expression of

value, money stands, in opposition to commodities, as the

abstract always stands in opposition to the particular. We will

see value in two forms: as particular commodities, and as money.

It is crucial to recognize that this development is latent in

the commodity form itself. Insofar as commodity relations are

well developed, so that exchange of products is common and

people are forced to consider the value of products separately

from their use values, the money form of value will also be

present. There is no reason to think of the commodity form

emerging historically before the money form.

However it is seen, it is clear that we still can't do anything

without this little thing called "money" and probably never will.

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