The Political Economy of Essence of Money and Recent Development

ABSTRACT

This paper attempts to examine the essence of money theory and the mainstream interpretation of money and the financial crisis of 2008. In order to understand the financial crisis, it is important to analyse both classical and Marx's commodity money theory. This study is important because in recent decades the rapid expansion of financial sectors, ballooning of debts and spectacular growth of fictitious capital requires a deep analysis of the capitalist system, and for this there is a need to revisit Marx wisdom, especially his theory of money. He also says that when there is excessive speculation over the future distributions of surplus value then there is a possibility for great instability in the system. Such tendencies were clearly seen during the 2008 financial crisis. Keynes found money's macroeconomic impact, namely, uncertainty, which he explains in universal terms. For Marx, the reason for uncertainty is associated with capitalist production decisions, which means capitalists are undertaking production for needs which are unknown to them; they are producing for other individuals not known to them. The study found that a materialist analysis of monetary phenomena is crucial to fully understanding this issue, including the financial crisis of 2008.

KEYWORDS:

• Money
• functions
• commodity money
• Marx's money theory
• financial crisis

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes on Contributor

Kalim Siddiqui teaches International Economics in the Department of Accounting, Finance and Economics at the University of Huddersfield, UK. He is also member of a number of international economic bodies including: Association for Heterodox Economics, International Initiative for Promotion of Political Economy (IIPPE) and the World Association for Political Economy (WAPE). He has spoken at several conferences in Germany, Portugal, Norway, UK, Pakistan and India and regularly contributed articles in journals such as International Journal of Political Economy, World Review of Political Economy, Journal of Asian Public Policy, Research in World Economy, Journal of Economics and Political Economy, Asian Profile, Social Scientist, and Economic and Political Weekly.

ORCID

Kalim Siddiqui http://orcid.org/0000-0002-7952-4573